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Income inequality in the U.S.: The Kuznets hypothesis revisited

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  • Mollick, André Varella

Abstract

Using annual data from 1919 to 2002, the structural transformation hypothesis proposed by Simon Kuznets helps explain the U-shape of U.S. top 1% or 0.01% income share distributions. Flexible autoregressive lag representations are employed and generalized methods of moments reinforce our results. First, as the employment share in goods producing activities falls, income inequality increases in the long run. Second, federal top taxation has only shortterm negative impacts. Third, these major results hold to business cycle controls (linear time trend and real output fluctuations) and to robustness checks of structural changes documented for the U.S. economy around the late 1970s.

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  • Mollick, André Varella, 2012. "Income inequality in the U.S.: The Kuznets hypothesis revisited," Economic Systems, Elsevier, vol. 36(1), pages 127-144.
  • Handle: RePEc:eee:ecosys:v:36:y:2012:i:1:p:127-144 DOI: 10.1016/j.ecosys.2011.06.001
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    Cited by:

    1. Gaston Yalonetzky, 2014. "Conditions for the most robust multidimensional poverty comparisons using counting measures and ordinal variables," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, pages 773-807.
    2. Cabral, René & García-Díaz, Rocío & Mollick, André Varella, 2016. "Does globalization affect top income inequality?," Journal of Policy Modeling, Elsevier, pages 916-940.
    3. Annim, Samuel Kobina & Mariwah, Simon & Sebu, Joshua, 2012. "Spatial inequality and household poverty in Ghana," Economic Systems, Elsevier, pages 487-505.
    4. Rene Cabral & Rocio Garcia-Diaz & Andre Varella Mollick, 2015. "Does globalization affect top income inequality?," Working Papers 372, ECINEQ, Society for the Study of Economic Inequality.
    5. Henrik Braconier & Giuseppe Nicoletti & Ben Westmore, 2015. "Policy challenges for the next 50 years," OECD Journal: Economic Studies, OECD Publishing, vol. 2015(1), pages 9-66.
    6. Åsa Johansson & Eduardo Olaberría, 2014. "Long-term Patterns of Trade and Specialisation," OECD Economics Department Working Papers 1136, OECD Publishing.

    More about this item

    Keywords

    Kuznets hypothesis; Progressive taxation; Structural transformation; Top percentile; Income shares; U-shape;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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