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What Determines Top Income Shares? Evidence from the Twentieth Century

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  • Roine, Jesper

    (SITE)

  • Vlachos, Jonas

    (Department of Economics, Stockholm University)

  • Waldenström, Daniel

    (IFN)

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.

Suggested Citation

  • Roine, Jesper & Vlachos, Jonas & Waldenström, Daniel, 2007. "What Determines Top Income Shares? Evidence from the Twentieth Century," SSE/EFI Working Paper Series in Economics and Finance 676, Stockholm School of Economics.
    • Handle: RePEc:hhs:hastef:0676
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    Cited by:

    1. Amar Iqbal Anwar & Mazhar Mughal, 2012. "Remittances, inequality and poverty in Pakistan: macro and microeconomic Evidence [Centre d'Analyse Théorique et de Traitement des données économiques REMITTANCES, INEQUALITY AND POVERTY IN PAKISTA," Working papers of CATT hal-01885153, HAL.
    2. Gordon, Robert J. & Dew-Becker, Ian, 2008. "Controversies about the Rise in American Inequality: A Survey," CEPR Discussion Papers 6817, C.E.P.R. Discussion Papers.
    3. Lane Kenworthy, 2010. "How Much Do Presidents Influence Income Inequality?," Challenge, Taylor & Francis Journals, vol. 53(2), pages 90-112.
    4. Christoph A. Schaltegger & Christoph Gorgas, 2011. "The Evolution of Top Incomes in Switzerland over the 20th Century," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 147(IV), pages 479-519, December.
    5. Brian Nolan & Ive Marx & Wiemer Salverda, 2011. "GINI DP 9: Comparable Indicators of Inequality Across Countries," GINI Discussion Papers 9, AIAS, Amsterdam Institute for Advanced Labour Studies.
    6. Thi Hong Hanh Pham, 2015. "Income Inequality and Foreign Aid," Working Papers hal-01158240, HAL.

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    More about this item

    Keywords

    Top incomes; income inequality; financial development; trade openness; government spending; economic development;
    All these keywords.

    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, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative

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