Inequality Persistence of 21 OECD Countries from 1870 to 2020: Linear and Non-Linear Fractional Integration Approaches

Sakiru Solarin, Carmen Lafuente, Luis Gil-Alana and Maria Jesus Gonzalez Blanch
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Carmen Lafuente: Universidad Francisco de Vitoria
Maria Jesus Gonzalez Blanch: Universidad Francisco de Vitoria

Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, 2022, vol. 164, issue 2, No 7, 725 pages

Abstract: Abstract This paper investigates inequality persistence in a group of 21 OECD countries using linear and non-linear fractionally integrated methods. Using linear models, the results show that the series are strongly persistent which implies lack of average reversal and permanency of shocks. Mean reversion is only found in the case of Finland and partial evidence of mean reversion is detected for Belgium, Greece, Austria and the Netherlands. The results are similar using non-linear methods. Mean reversion is only found in the case of Finland, Belgium, Greece and Spain. Although, most countries show no evidence of non-linear structures except for four countries, namely, Finland, Spain, the United Kingdom and the United States. The implications of the empirical findings are reported at the end of the manuscript.

Keywords: Inequality; Persistence; Fractional Integration; Gini Index; OECD (search for similar items in EconPapers)
JEL-codes: C22 D63 E24 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11205-022-02982-x

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