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What Determines Top Income Shares? Evidence from the Twentieth Century

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Author Info
Roine, Jesper () (SITE)
Vlachos, Jonas () (Department of Economics, Stockholm University)
Waldenström, Daniel () (IFN)

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Abstract

This paper examines the long-run determinants of the evolution of top in-come shares. Using a newly assembled panel of 16 developed countries over the entire twentieth century, we find that financial development dis-proportionately boosts top incomes. This effect appears to be particularly strong during the early stages of a country’s development. Economic growth is strongly pro-rich which is inconsistent with globalized labor markets determining the incomes of elites. Furthermore, international trade is not associated with increases in top incomes on average, but is so in An-glo-Saxon countries. Finally, tax progressivity has a significant negative ef-fect on top income shares whereas government spending has no such clear impact on inequality.

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Publisher Info
Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 676.

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Length: 39 pages
Date of creation: 29 Sep 2007
Date of revision:
Handle: RePEc:hhs:hastef:0676

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Related research
Keywords: Top incomes; income inequality; financial development; trade openness; government spending; economic development;

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Find related papers by JEL classification:
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
F10 - International Economics - - Trade - - - General
G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
N30 - Economic History - - Labor and Consumers, Demography, Education, Income, and Wealth - - - General, International, or Comparative

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Dew-Becker, Ian & Gordon, Robert J, 2008. "Controversies about the Rise in American Inequality: A Survey," CEPR Discussion Papers 6817, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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