Nonlinearity and cross-country dependence of income inequality

Leena Kalliovirta and Tuomas Malinen

No 358, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: We use top income data and the newly developed regime switching Gaussian mixture vector autoregressive model to explain the dynamics of income inequality in developed economies within the last 100 years. Our results indicate that the process of income inequality consists of two equilibriums identifiable by high inequality, high income fluctuations and low inequality, low income fluctuations. Our results also show that income inequality in the U.S. is the driver of income inequality in other developed economies. Both economic and institutional changes emanating from the U.S. explain this dominance.

Keywords: top 1% income share; GMAR; multiple equilibria; developed economies. (search for similar items in EconPapers)
JEL-codes: C32 C33 D30 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2015-02
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Non‐Linearity and Cross‐Country Dependence of Income Inequality (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2015-358

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