publication . Preprint . Article . 2015

Nonlinearity and cross-country dependence of income inequality

Leena Kalliovirta; Tuomas Malinen;
Open Access
  • Published: 01 Feb 2015
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.
Persistent Identifiers
free text keywords: top 1% income share, GMAR, multiple equilibria, developed economies., jel:C32, jel:C33, jel:D30, Economics, Labour economics, Nonlinear system, Income inequality metrics, Economic inequality, Distribution (economics), business.industry, business, Econometrics, Cross country, Autoregressive model, Inequality, media_common.quotation_subject, media_common, Income distribution

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