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Convergence of Income Inequality in OECD Countries Since 1870: A Multi-Method Approach with Structural Changes

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  • Sakiru Adebola Solarin

    (University of Nottingham Malaysia Jalan Broga)

  • Sinan Erdogan

    (Hatay Mustafa Kemal University)

  • Ugur Korkut Pata

    (Osmaniye Korkut Ata University)

Abstract

This paper aims to examine convergence of income inequality in 21 OECD countries using several empirical techniques. In particular, we have used a new panel stationarity test, which allows for structural changes and cross-sectional dependence to examine the stochastic convergence of income inequality. We also employed a time series approach, residual augmented least squares-Lagrange multiplier unit root test. The empirical results show evidence for absolute, conditional, and sigma convergence. The conditional convergence test results suggest that countries are converging, but conditional on the two structural factors-economic and population growth. The stochastic convergence test results indicate the existence of convergence at the country-specific level. The results further confirm the existence of convergent clubs among OECD countries.

Suggested Citation

  • Sakiru Adebola Solarin & Sinan Erdogan & Ugur Korkut Pata, 2023. "Convergence of Income Inequality in OECD Countries Since 1870: A Multi-Method Approach with Structural Changes," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 166(3), pages 601-626, April.
    • Handle: RePEc:spr:soinre:v:166:y:2023:i:3:d:10.1007_s11205-023-03080-2
    DOI: 10.1007/s11205-023-03080-2
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