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Inequality amongst the wealthiest and its link with economic growth

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  • Philip Hans Franses
  • Stephanie Vermeer

Abstract

In this article, we correlate the key features of the distribution of wealth of the 500 wealthiest individuals in the Netherlands with economic growth and stock market returns for the period 1998 to 2009. We show that each year the distribution obeys a power law and that the key parameter measures the degree of inequality. Our main finding is that more inequality amongst the wealthiest is associated with higher economic growth.

Suggested Citation

  • Philip Hans Franses & Stephanie Vermeer, 2012. "Inequality amongst the wealthiest and its link with economic growth," Applied Economics, Taylor & Francis Journals, vol. 44(22), pages 2851-2858, August.
  • Handle: RePEc:taf:applec:44:y:2012:i:22:p:2851-2858
    DOI: 10.1080/00036846.2011.566211
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    References listed on IDEAS

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    1. Levy, Moshe & Solomon, Sorin, 1997. "New evidence for the power-law distribution of wealth," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 242(1), pages 90-94.
    2. Joseph Persky, 1992. "Retrospectives: Pareto's Law," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 181-192, Spring.
    3. Castaldi, Carolina & Milakovic, Mishael, 2007. "Turnover activity in wealth portfolios," Journal of Economic Behavior & Organization, Elsevier, vol. 63(3), pages 537-552, July.
    4. Eric Neumayer, 2004. "The super-rich in global perspective: a quantitative analysis of the Forbes list of billionaires," Applied Economics Letters, Taylor & Francis Journals, vol. 11(13), pages 793-796.
    5. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
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    Cited by:

    1. Philip Hans Franses & Bert Groot, 2016. "Corruption and inequality of wealth amongst the very rich," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(3), pages 1245-1252, May.

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