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Inequality and top income cyclicality

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  • Capehart, Kevin W.

Abstract

Previous studies have shown that, as top incomes became more concentrated over recent decades, they also became more cyclical. This paper derives an exact expression for top-income cyclicality to show that it rises whenever average income growth tends to be captured by those at the top, as it has over recent decades. The increased cyclicality of top incomes may therefore be a reflection of their increased concentration rather than a distinct phenomenon in need of its own explanation.

Suggested Citation

  • Capehart, Kevin W., 2017. "Inequality and top income cyclicality," Economics Letters, Elsevier, vol. 157(C), pages 152-154.
    • Handle: RePEc:eee:ecolet:v:157:y:2017:i:c:p:152-154
    DOI: 10.1016/j.econlet.2017.06.019
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    References listed on IDEAS

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    1. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality in the United States, 1913–1998," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 1-41.
    2. Jonathan A. Parker & Annette Vissing-Jorgensen, 2010. "The Increase in Income Cyclicality of High-Income Households and Its Relation to the Rise in Top Income Shares," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 41(2 (Fall)), pages 1-70.
    3. Fatih Guvenen & Serdar Ozkan & Jae Song, 2014. "The Nature of Countercyclical Income Risk," Journal of Political Economy, University of Chicago Press, vol. 122(3), pages 621-660.
    4. Bradley Hardy & James P. Ziliak, 2014. "Decomposing Trends In Income Volatility: The “Wild Ride” At The Top And Bottom," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 459-476, January.
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    More about this item

    Keywords

    Inequality; Cyclicality; Volatility;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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