IDEAS home Printed from https://ideas.repec.org/a/bla/revinw/v66y2020i1p126-160.html
   My bibliography  Save this article

Do Rising Top Incomes Spur Economic Growth? Evidence From OECD Countries Based on a Novel Identification Strategy

Author

Listed:
  • Helmut Herwartz
  • Yabibal M. Walle

Abstract

We investigate the causal relationship between the growth rate of top income shares and economic growth in 12 OECD economies for the period 1950–2010. To analyze patterns of short‐ and long‐run causality, we build upon recent advances in structural‐vector autoregressive modeling of non‐Gaussian systems. This framework allows us to discriminate between rival transmission channels by means of dependence tests, since independent shocks are unique for a particular causation pattern. We consider the share of income accruing to the top 1 percent (T1), to the next 9 percent (T9), and to the top decile (T10). While structural models display considerable heterogeneity across countries, mean group and pooled results strongly favor a specific transmission pattern. In particular, T1 has a long‐run positive impact on economic development. This result, which is also confirmed by identified impulse‐response functions, is particularly evident for the post‐1980 period.

Suggested Citation

  • Helmut Herwartz & Yabibal M. Walle, 2020. "Do Rising Top Incomes Spur Economic Growth? Evidence From OECD Countries Based on a Novel Identification Strategy," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(1), pages 126-160, March.
    • Handle: RePEc:bla:revinw:v:66:y:2020:i:1:p:126-160
    DOI: 10.1111/roiw.12399
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/roiw.12399
    Download Restriction: no
    File URL: https://libkey.io/10.1111/roiw.12399?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dávila-Fernández, Marwil J. & Punzo, Lionello F., 2021. "The Kuznets curve of the rich," Economic Systems, Elsevier, vol. 45(4).
    2. Policardo, Laura & Sanchez Carrera, Edgar J., 2024. "Wealth inequality and economic growth: Evidence from the US and France," Socio-Economic Planning Sciences, Elsevier, vol. 92(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:revinw:v:66:y:2020:i:1:p:126-160. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/iariwea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.