What Determines Top Income Shares? Evidence from the Twentieth Century

Jesper Roine (), Jonas Vlachos and Daniel Waldenström

No 676, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: This paper examines the long-run determinants of the evolution of top in-come shares. Using a newly assembled panel of 16 developed countries over the entire twentieth century, we find that financial development dis-proportionately boosts top incomes. This effect appears to be particularly strong during the early stages of a country’s development. Economic growth is strongly pro-rich which is inconsistent with globalized labor markets determining the incomes of elites. Furthermore, international trade is not associated with increases in top incomes on average, but is so in An-glo-Saxon countries. Finally, tax progressivity has a significant negative ef-fect on top income shares whereas government spending has no such clear impact on inequality.

Keywords: Top incomes; income inequality; financial development; trade openness; government spending; economic development (search for similar items in EconPapers)
JEL-codes: D31 F10 G10 N30 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2007-09-29
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Citations: View citations in EconPapers (6)

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Working Paper: What Determines Top Income Shares? Evidence from the Twentieth Century (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:hastef:0676

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