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"Income inequality and redistribution in Scandinavian countries"

Author

Listed:
  • Petar Soric

    (Faculty of Economics and Business, University of Zagreb.)

  • Oscar Claveira

    (AQR-IREA Research Group. Departament d Econometria, Estad stica i Economia Aplicada. Universitat de Barcelona. Av. Diagonal, 690. 08034 Barcelona. Spain.)

Abstract

This paper investigates the adjustment of government redistributive policies in Scandinavian countries following changes in income inequality over the period 1980-2021. We use two complementary measures of inequality: the share of total income accruing to top percentile income holders, as well as the ratio of the share of total income accruing to top decile income holders divided by that accumulated by the bottom 50%. We find that the sign of the relationship between inequality and redistribution is mostly positive and time-varying. We also find significant evidence that redistributive measures in the form of taxes and government transfers adjust more rapidly in an upward than a downward direction, with the exception of Norway. We obtain a significant long-run relationship between both variables in Iceland and Sweden, while in Norway it just holds for the short run.

Suggested Citation

  • Petar Soric & Oscar Claveira, 2023. ""Income inequality and redistribution in Scandinavian countries"," IREA Working Papers 202310, University of Barcelona, Research Institute of Applied Economics, revised Oct 2023.
    • Handle: RePEc:ira:wpaper:202310
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    References listed on IDEAS

    as
    1. P. J. Dawson, 1997. "On testing Kuznets' economic growth hypothesis," Applied Economics Letters, Taylor & Francis Journals, vol. 4(7), pages 409-410.
    2. Kohlscheen, Emanuel & Lombardi, Marco & Zakrajšek, Egon, 2021. "Income Inequality and the depth of economic downturns," Economics Letters, Elsevier, vol. 205(C).
    3. Oscar Claveria & Petar Sorić, 2023. "Labour market uncertainty after the irruption of COVID-19," Empirical Economics, Springer, vol. 64(4), pages 1897-1945, April.
    4. Jurgen A. Doornik & Henrik Hansen, 2008. "An Omnibus Test for Univariate and Multivariate Normality," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(s1), pages 927-939, December.
    5. Hannu Tanninen, 1999. "Income inequality, government expenditures and growth," Applied Economics, Taylor & Francis Journals, vol. 31(9), pages 1109-1117.
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    Keywords

    Income inequality; Redistributive policy; Taxes; Government transfers. JEL classification: C50; D30; E62; H50.;
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