Capital income shares and income inequality in the European Union

Eva Schlenker () and Kai D. Schmid ()
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Eva Schlenker: University of Hohenheim
Kai D. Schmid: Macroeconomic Policy Institute

No 329, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: In this paper, we measure the effect of changing capital income shares upon inequality of gross household income. Using EU-SILC data covering 17 EU countries from 2005 to 2011 we find that capital income shares are positively associated with the concentration of gross household income. Moreover, we show that the transmission of a shift in capital income shares into the personal distribution of income depends on the concentration of capital income in an economy. Using fixed effect models we find that changing capital income shares play an important role in the development of household income inequality. Hence, in many industrialized countries income inequality has by no means evolved independently from the observed structural shift in factor income towards a higher capital income share over the last decades.

Keywords: Factor shares; income inequality; EU-SILC; fixed effects. (search for similar items in EconPapers)
JEL-codes: D31 D33 E25 E6 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2014-04
New Economics Papers: this item is included in nep-eec, nep-mac and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Capital Income Shares and Income Inequality in the European Union (2013)
Working Paper: Capital income shares and income inequality in the European Union (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2014-329

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