Rising top incomes do not raise the tide

Dierk Herzer and Sebastian Vollmer

Journal of Policy Modeling, 2013, vol. 35, issue 4, 504-519

Abstract: This paper examines the long-run relationship between top income shares and economic growth for a panel of nine high-income countries over the period from 1961 to 1996. We use panel cointegration and causality techniques that are robust to omitted variables, slope heterogeneity, and endogenous variables. Our main findings are that an increase in the top decile of income share reduces growth, and that long-run causality also runs in the opposite direction—from economic growth to top income shares.

Keywords: Top income shares; Trickle-down economics; Income inequality; Growth; Panel cointegration (search for similar items in EconPapers)
JEL-codes: C23 O11 O15 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:35:y:2013:i:4:p:504-519

DOI: 10.1016/j.jpolmod.2013.02.011

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