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Growth is (really) good for the (really) rich

Raymundo Campos-Vazquez, Emmanuel Chavez and Gerardo Esquivel ()

Serie documentos de trabajo del Centro de Estudios Económicos from El Colegio de México, Centro de Estudios Económicos

Abstract: This paper analyzes the relationship between mean income and the income of the rich. Our methodology closely follows that of Dollar and Kraay (2002), but instead of looking at the bottom of the distribution, we analyze the top. We use panel data from the World Top Incomes database, which collects top income data from several countries using tax returns as the raw source. We define the “rich” as earners in the top 10 percent, 1 percent, 0.1 percent, and 0.01 percent of the income distribution. We find that economic growth is good for the rich in the sense that the mean income of the top decile of the distribution grows in the same proportion as that of the whole population. However, we also find that the income of earners in the top percentile of the distribution and above grows in an even larger proportion than average income: that is, economic growth is really good for the really rich. We also find that during economic downturns, the average income of top earners responds proportionally less to changes in mean income than during economic expansions. Our results are robust to different sample specifications.

Keywords: growth, income distribution; inequality; top income; rich (search for similar items in EconPapers)
JEL-codes: D31 D63 E01 I30 O40 (search for similar items in EconPapers)
Date: 2013-09
New Economics Papers: this item is included in nep-pbe
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Journal Article: Growth is (really) good for the (really) rich (2017) Downloads
Working Paper: Growth is (really) good for the (really) rich (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:emx:ceedoc:2013-09

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