Reversal of the Kuznets curve: Study on the inequality–development relation using top income shares data

Elina Tuominen
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Elina Tuominen: School of Management, University of Tampere

No 1610, Working Papers from Tampere University, Faculty of Management and Business, Economics

Abstract: In this study, recently published top 1% income share series are exploited in studying the inequality–development association in 26 countries from 1900 to 2010. The top income shares data are of high quality and provide interesting possibilities for studying slow development processes. Because many empirical inequality– development studies have challenged the use of quadratic specifications, this study addresses the issue of functional form by applying penalized spline methods. The relationship between the top 1% income share and development is found to experience a reversal at the highest levels of development and, thus, a positive association is now observed in many “advanced” economies. In an additional analysis covering a shorter time period, the discovered positive relationship holds at the highest levels of development when controls for two sectoral measures are included.

Keywords: inequality; top incomes; development; nonlinearity; longitudinal data (search for similar items in EconPapers)
JEL-codes: N30 O11 O15 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2016-09
New Economics Papers: this item is included in nep-his
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http://urn.fi/URN:ISBN:978-952-03-0252-8 First version, 2016 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:tam:wpaper:1610

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