Top Incomes and National Savings

Andrew Leigh and Alberto Posso ()

No 588, CEPR Discussion Papers from Centre for Economic Policy Research, Research School of Economics, Australian National University

Abstract: The relationship between income inequality and national savings is theoretically ambiguous, and past empirical studies have delivered mixed results. We revisit the question using a newly available source of data on inequality: the income share of the richest 10 percent and the richest 1 percent. Combining this with historical data on national savings rates, we are able to investigate the relationship for eleven developed countries over the period 1921-2002. We find no consistent relationship between lagged top income shares and current savings rates, and our standard errors are small enough that we are able to reject more than modest effects in either direction. We view this as suggesting that inequality at the top end of the distribution is not a major driver of national savings rates.

Keywords: national savings; inequality; top incomes; panel data (search for similar items in EconPapers)
JEL-codes: D30 E21 O50 (search for similar items in EconPapers)
Date: 2008-10
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: TOP INCOMES AND NATIONAL SAVINGS (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:auu:dpaper:588

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