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Inequality and government debt: Evidence from OECD panel data

Weijie Luo

Economics Letters, 2020, vol. 186, issue C

Abstract: This paper analyzes how government debt can be caused by changes in the income distribution. Unlike Azzimonti et al. (2014), I distinguish between income inequality induced by differences in labor productivity and income inequality induced by differences in capital income, utilizing the Luxembourg Income Study. Using data for OECD countries, an increase in labor income inequality leads to higher debt level whilst capital income inequality is negatively associated with debt.

Keywords: Capital income; Inequality; Government debt (search for similar items in EconPapers)
JEL-codes: D31 H63 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:186:y:2020:i:c:s0165176519304380

DOI: 10.1016/j.econlet.2019.108869

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