Long-Run Trends in the Distribution of Income and Wealth

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This paper reviews the long run developments in the distribution of personal income and wealth. It also discusses suggested explanations for the observed patterns. We try to answer questions such as: What do we know, and how do we know, about the distribution of income and wealth over time? Are there common trends across countries or over the path of development? How do the facts relate to proposed theories about changes in inequality? We present the main inequality trends, in some cases starting as early as in the late eighteenth century, combining previous research with recent findings in the so-called top income literature and new evidence on wealth concentration. The picture that emerges shows that inequality was historically high almost everywhere at the beginning of the twentieth century. In some countries this situation was preceded by increasing concentration, but in most cases inequality seems to have been relatively constant at a high level in the nineteenth century. Over the twentieth century inequality decreased almost everywhere for the first 80 years, largely due to decreasing wealth concentration and decreasing capital incomes in the top of the distribution. Thereafter trends are more divergent across countries and also different across income and wealth distributions. Econometric evidence over the long run suggests that top shares increase in periods of above average growth while democracy and high marginal tax rates are associated with lower top shares. Terms of use: Documents in

Historical Patterns of Inequality and Productivity around Financial Crises

“…8 The top income share series are also largely overlapping with the data by Roine and Waldenström (2015). An exception are the years 1990−1992 for Finland, which I add.…”

“…However, this changes when considering the post-WWII sample only, for which both productivity measures outperform credit as predictor variables (see Table 20 in Appendix A.2.3). 28,29 observations for seven additional countries based on the data by Roine and Waldenström (2015), I do not find that wealth inequality is a statistically significant predictor of crises. 28 The associated curves for the results in columns 1 and 3 are plotted in Figure 13 in Appendix A.2.3.…”

Wages and Human Capital in Finance: International Evidence, 1970-2005

“…22 More importantly, the within share completely dominates, and it is on average equal to one: Changes in relative skilled wages overall, not changes 2 0 Using survey data and corrections for top coding, Philippon and Reshef (2012) …nd that …nance accounts for 15% to 25% of the overall increase in wage inequality in the United States in 1980-2005. Roine and Waldenstrom (2014) show how close the …nance relative wage in Philippon and Reshef (2012) tracks the share of income of the top percentile in the U.S. over the entire 20 th century. In line with this, Bakija, Cole, and Heim (2012) document that …nancial professionals increased their representation in the top percentile of earners (including capital gains) from 7.7% in 1979 to 13.2% in 2005, while their representation in the top 0.1 percentile of earners from 11.2% in 1979 to 17.7% in 2005 (see also Kaplan and Rauh (2010)).…”

What has Been Happening to UK Income Inequality Since the Mid-1990s? Answers from Reconciled and Combined Household Survey and Tax Return Data

“…In the top incomes literature, these US estimates of levels and trends are often compared with the WTID estimates for the UK discussed earlier: see the substantial review articles by Atkinson, Piketty and Saez (2011) as well as Roine and Waldenström (2015), for example. This UK series refers to gross income and the sharing unit is the individual adult.…”