Capital income shares and income inequality in 16 EU member countries

Abstract

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Inequality and rising profitability in the United States, 1947–2012

“…Overall family income inequality, as measured by the Gini coefficient, the income share of the top 5%, and the poverty rate are not. This finding contrasts with those of Adler and Schmid (2013) and Schlenker and Schmid (2014) who do find that rising capital income shares are associated with increasing inequality of personal income as measured by the Gini coefficient. Schlenker and Schmid (2014) also find the same for the income share of the top decile but I do not find this for the income share of the top 5%.…”

“…This finding contrasts with those of Adler and Schmid (2013) and Schlenker and Schmid (2014) who do find that rising capital income shares are associated with increasing inequality of personal income as measured by the Gini coefficient. Schlenker and Schmid (2014) also find the same for the income share of the top decile but I do not find this for the income share of the top 5%. The likely reasons for the difference in results are that I focus only on the United Sates and that I also use a different set of control variables.…”

“…These include Arpaia, Perez, and Pichelmann (2009) for European countries, Ellis and Smith (2010) for developed economies, Wolff (2010) for the United States, Alder and Schmid (2013) for Germany, and Schlenker and Schmid (2014) for the European Union.…”

“…They find that rising capital income shares are associated with increasing inequality of personal income as measured by the Gini coefficient. Schlenker and Schmid (2014), using data from the EU-SILC for the European Union, find econometric evidence on the basis of a fixed effect model of a positive and significant relation between the capital income share and the inequality of household income. In their model, they also control for several other factors such as changes in the employment level and the employment structure and the concentration of capital income within the country.…”

Linking functional with personal income distribution: a stock-flow consistent approach

“…A similar result is reported by Checchi and García-Peñalosa (2010) for a panel of OECD countries. Schlenker and Schmid (2013) utilise data for EU countries and find that personal income distribution depends significantly on capital income shares.…”