 Inflation and wealth inequalityDong-Hyeon Kim and Shu-Chin Lin Economic Analysis and Policy, 2024, vol. 82, issue C, 893-907 Abstract: Much effort has been devoted to exploring the consequences of inflation on income inequality. Little documented is the effect on wealth inequality, which is more important in determining economic opportunities and rewards and hence political power. To close the void, the paper empirically examines whether inflation affects wealth inequality proxied by top wealth shares, with special emphasis on potential nonlinearity as well as associated mechanisms. In a sample of developing and developed countries, we find that top wealth shares have a U process whereas bottom wealth shares follow a hump-shaped path when inflation increases. Wealth inequality first decreases and then increases with inflation and there exists an inflation threshold such that an increase or decrease in inflation will lead to a rise in wealth inequality. Similar results are reached when considering income shares. Pathway analyses highlight that entrepreneurship and asset prices are potential channels through which inflation impacts wealth inequality. Keywords: Inflation; Top wealth share; Bottom wealth share; Top income share; Entrepreneurship (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:82:y:2024:i:c:p:893-907 DOI: 10.1016/j.eap.2024.04.016 Access Statistics for this article Economic Analysis and Policy is currently edited by Clevo Wilson More articles in Economic Analysis and Policy from Elsevier |
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