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Traces of the past in income inequality

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  • Ozan Eksi

    (TOBB University of Economics and Technology, Department of Economics)

Abstract

The cumulative effect on income inequality of structural economic changes can only be observed in years. We discuss the implications of this point for the empirical approach to the inequality data through a simple linear regression setting. We show that determinants of inequality can only be found by (i) specifying a dynamic model, or (ii) using the average of changes in within-cohort inequalities as the dependent variable. The results obtained with the US and UK data show that these two methods deliver similar results, which significantly differ from those obtained through standard static regression analyses.

Suggested Citation

  • Ozan Eksi, 2023. "Traces of the past in income inequality," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(4), pages 815-834, December.
    • Handle: RePEc:spr:joecin:v:21:y:2023:i:4:d:10.1007_s10888-023-09573-x
    DOI: 10.1007/s10888-023-09573-x
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    References listed on IDEAS

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    More about this item

    Keywords

    Income inequality; Econometric modeling;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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