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This paper addresses the impact of productive government expenditure on income inequality using a dataset of 80 countries over the period of 1980–2015. It incorporates the conflicting predictions implied by alternative growth models on this issue. While the neoclassical model suggests that productive government expenditure will reduce long-run income inequality, the corresponding endogenous growth model suggests the opposite. We examine this proposition, by considering both the aggregate Gini coefficient, and the income shares of quintiles. The results obtained using the Gini coefficients provide compelling support for the contrasting impacts of government investment on income inequality, suggested by the underlying theoretical models. These findings are supported, albeit somewhat more weakly by the regressions employing the quintile data. Our general conclusion is that government investment has a mixed effect on income inequality, a conclusion consistent with previous studies.

The modern specifics of the temporarily free funds management on Unified Treasury Account of the Federal budget have been analysed. The assessment of the possibility and expediency of using of the income part received from the management of these funds to transfer to the Pension Fund of Russia budget as an additional factor in balancing its income and expenditure obligations, – has been made. An analysis of the current legislation has shown that the Pension Fund of Russia is not included in the number of recipients of income shares from managing balances on a single treasury account. In this regard, an estimate of the approximate amount of income from managing balances on a single treasury account based on open data has been made. It is proposed to include the Pension Fund of Russia in process of distributing these revenues since their value is sufficient to cover up to 10 % of the budget deficit of the Pension Fund of Russia.

Objective To examine the distributional effects of the 2008 recession and subsequent recovery across generational cohorts. Methods Using data from the Survey of Consumer Finances (2007–2016), we constructed a measure of economic well-being accounting for income, household size, and annuitized value of assets. We examine trajectories of adjusted income and inequality, using Gini coefficients and income shares by decile, for the overall population and by cohort during the recession and recovery. Results Inequality declined temporarily during the recession, but reached new highs during the recovery. During recovery, population-level increases in economic resources were not reflected among below-median households, as the more concentrated financial assets rose while broader-based home equity and employment fell or remained stagnant. Inequality measures increased for cohorts in their primary working years (Generation-X and Baby Boomers), but not among the younger Millennials, who were at early stages of education, workforce entry, and household formation. Discussion The study illustrates an integrative approach to analyzing cumulative dis/advantage by considering interactions between historically consistent macrolevel events, such as economic shocks or policy choices affecting all cohorts, and the persistent life-course processes that tend to increase heterogeneity and inequality as cohorts age over time. Although recovery policies led to rapid recovery of financial asset values, they did not proportionately reach those below the median or their economic resource types. Results suggest that in a high-inequality environment, recovery policies from economic shocks may need tailoring to all levels of resources in order to achieve more equitable recovery outcomes and prevent exacerbating cohort inequality trajectories.

Grouped data in the form of income shares have conventionally been used to estimate income inequality due to the lack of individual records. We present a systematic evaluation of the performance of parametric distributions and non-parametric techniques to estimate economic inequality using more than 3300 data sets. We also provide guidance on the choice between these two approaches and their estimation, for which we develop the GB2group R package. Our results indicate that even the simplest parametric models provide reliable estimates of inequality measures. The non-parametric approach, however, fails to represent income distributions accurately.

We construct the first consistent series on the long-term distribution of income in Poland by combining tax, household survey and national accounts data. We document a U-shaped evolution of inequalities from the end of the nineteenth century until today: (1) inequality was high before WWII; (2) abruptly fell after the introduction of communism in 1947 and stagnated at low levels during the whole communist period; (3) experienced a sharp rise with the return to capitalism in 1989. We find that official survey-based measures strongly under-estimate the rise in inequality since 1989. Our results highlight the prominent role of capital income in driving the U-shaped evolution of top income shares. The unique inequality history of Poland speaks to the central role of institutions and policies in shaping inequality in the long run. Supplementary Information The online version contains supplementary material available at 10.1007/s10887-021-09190-1.

This paper considers the role of asset price bubbles (crashes) as an important determinant in seeking a further explanation for top income shares. The asset price bubbles caused at least in part by monetary policies, along with other determinants such as top tax rates and innovativeness are the important drivers to explain the surge in top income shares. The empirical results show that correlation between asset bubbles and top inequality is positive and significant. The regression coefficient of stock and housing market bubbles have a positive effect on top income shares, while the stock and housing market crashes fail to reduce the surge in top income shares. In sum, as the asset markets grow, the share of income going to those at the very top increases and the accumulation of income accelerates if the duration of bubbles expands. Concentration of income at the very top is much more important when capital gains are counted as income.

Purpose of the study: GDP Growth does not necessarily bring improvements in the lives of people belonging to lower social strata. The objective of this study is to analyse the welfare implications of economic growth in Pakistan. We aim to investigate that to what extent economic growth has been successful to bring improvements in the welfare of the poor segments of the society. Methodology: By using the data of different waves of Household Integrated Economic Survey (HIES), Pakistan Integrated Household Survey (PIHS), Pakistan Social and Living Standards Measurement (PSLM) Survey over the period of 1990-2017, we have done an analysis of income shares received by different income groups. We have also constructed Ahluwalia-Chenery Equal Weighted and Poverty Weighted Welfare Indices (Ahluwalia and Chenery, 1974). In order to analyse the welfare implications of economic growth in the country, these indices have been compared with another index termed as Income Weighted Index (IWI). Main Findings: Empirical results indicate that substantial income gaps exist among different income groups. In the absence of an effective fiscal policy, these gaps do not seem to be narrower.

The paper calculates the top income shares in Greece from 1967 (the seizure of power by the military dictatorship) until 2017 (the aftermath of the debt crisis). This long-run perspective allows for the examination of the relationship between inequality and institutional transformations, namely democracy, finance and crisis. We find in particular that (a) transition to democracy did not affect the income share of the top decile, whereas social democracy had a significant negative impact (b) financial development and liberalization substantially increased all top decile shares (c) debt crisis, consolidation and recession were beneficial for the upper ranks of the top decile.

Do policies and institutions matter for pre-tax income inequality? I build an annual panel of 43 countries for the period 1980–2016 to document cross-country facts. I find robust correlations between pre-tax income shares and economic policy—financial development, trade openness, government expenditure, and income taxation—even after controlling for economic development. I further find that proxies of institutional quality—e.g., state development, corruption, or political exclusion—mediate the relationship between top income shares and economic policy, in particular for trade openness and government expenditure. The role of institutions in allowing or limiting rent-seeking can rationalize the results.

We examine the causal impact of financial development (FD) on top income shares for a panel of 14 OECD countries—five Anglo‐Saxon countries, eight continental European countries, and Japan—over a 110‐year period. In our main General Method of Moments estimates, we find that a 1‐percentage‐point change in FD increases the top 1% income share by 0.2%. In distribution terms, a 1‐SD incr=ease in FD increases the top 1% income share by around 0.4 of an SD. The effects are robust to various measures of top income shares and FD and alternative estimation techniques, including nonparametric estimation. FD is typically viewed in positive terms in that it makes it easier to access credit and facilitates economic growth. Our results are important because they contribute to understanding of the potential negative effects of FD.

The study aimed to identify the most salient and critical factors influencing the Stock yield and causing this sharp fluctuation, and clarifying which factors are more influential than others on the Stock yield in the Amman Stock Market – Jordan. The study population consisted of all listed companies in the Amman Stock Market. The sample of the study is random stratified and includes 30% of the original population. The study sample numbered 60 companies of the companies listed on the Amman Stock Market. The main findings are the positive relationship between inflation rates, interest rate, number of employees and capital shares with income shares. The results also showed no relationship between the deficit and surplus of balance of payments and stock yield, as well as no relationship between the level of gross domestic product (GDP) and the stock yield in Amman Stock Market in Jordan. Keywords: Stock yield, inflation rate, interest rate, number of employees, balance of payment, gross domestic product.JEL Classifications: E44; G10DOI: https://doi.org/10.32479/ijefi.10415

The relationship between economic growth and income inequality remains a puzzle in the literature. The main problem has been finding a way to account for the endogeneity of growth. Using century-long data of 14 OECD countries, this study disentangles the growth–inequality relationship. In doing so, our main contribution is employing genetic and geographical distances as instruments for economic growth. The instruments are constructed on the premise that the growth of one country spills over to the others if they are connected through trade and other forms of exchange; however, the genetic and geographical distances between countries represent barriers to such spillovers. Using alternative specifications and measures, we find that growth reduces the inequality measured by top income shares. As capital share increases in the growth process and capital substitutes labour, inequality-reducing strength of growth declines. Another important finding is that the effect of growth on top income shares is more significant among the highest income groups.

Purpose The purpose of this paper is to analyze empirically the relationship between the labor share and income inequality, as measured by the Gini coefficient and by the income shares for different quintiles, during the period 1990–2015 for 62 developed and developing countries. Design/methodology/approach This study uses panel data techniques to analyze empirically the relationship between the labor share and income inequality. Findings This paper finds that a lower labor share is associated with a higher Gini coefficient. A lower labor share is found to be strongly associated with a smaller income share for the lowest two quintiles and larger income share for the highest quintile and weakly associated with a smaller income share for the third and fourth quintiles. Moreover, this paper finds that the lower the quintile, the stronger the impact of the labor share on the income share of the quintile. Social implications Policymakers should take into account the evolution of the labor share. Public policies that improve labor market outcomes, such as those aimed to promote participation in the labor market and strengthen the human capital of low-income groups, seem necessary to prevent the rise in economic inequalities. Moreover, as the digital transformation of society progresses, policies to promote skill deepening may have an important role in reversing excessive inequalities. Originality/value How changes in the labor share are associated with changes in the Gini coefficient, and how this is driven by income shares for different quintiles, for a broad range of countries during the most recent period, has not been comprehensively studied using panel data techniques.

We propose an efficient estimation method for the income Pareto exponent when only certain top income shares are observable. Our estimator is based on the asymptotic theory of weighted sums of order statistics and the efficient minimum distance estimator. Simulations show that our estimator has excellent finite‐sample properties. We apply our estimation method to US top income share data and find that the Pareto exponent has been ranging between 1.4 and 1.8 since 1985, suggesting that the rise in inequality during the last three decades is mainly driven by redistribution between the rich and poor, not among the rich.

One of the most debated questions in alternative macroeconomics regards whether demand policies have permanent or merely transitory effects. While demand matters in the long run in (neo-) Kaleckian economics, both economists operating within other Keynesian traditions (e.g. Skott 1989) as well as Classical economists Dumenil and Levy (Manchester School 67(6):684–716, 1999) argue that in the long-run output growth is constrained by an exogenous natural growth rate. This paper attempts to bridge the gap by analyzing the role of firm beliefs about the state of the economy in a labor-constrained growth and distribution model based on Kaldor (Review of Economic Studies 23(2):83–100, 1956) and Goodwin (Journal of Evolutionary Economics 1(1):29–47, 1991) that is also compatible with the evolutionary perspective on coordination (or the lack thereof) within markets by Metcalfe et al. (Cambridge Journal of Economics 30:7–32, 2006). The main innovation is the inclusion of beliefs about economic activity in an explicitly dynamic choice of capacity utilization at the firm level. We show that: (i) the relevance of such beliefs generates an inefficiently low utilization rate and labor share in equilibrium, but (ii) the efficient utilization rate can be implemented through fiscal policy. Under exogenous technical change, (iii) the inefficiency does not affect the equilibrium employment rate and growth rate, but expansionary fiscal policy has positive level effects on both GDP and the labor share. However, (iv) with endogenous technical change a la Verdoorn (1949), fiscal policy has also temporary growth effects. Finally, (v) the fact that the choice of utilization responds to income shares has a stabilizing effect on growth cycles, even under exogenous technical change, that is analogous to factor substitution.

We study the link between tax progressivity and top income shares. Using variation from Western tax reforms in the 1980s and 1990s and synthetic control method estimation, we find that reductions in tax progressivity had large and lasting positive impacts on top income shares. The effects are largest within the top percentile and almost zero in the lower half of the top decile, and all results are robust to different model specifications, placebo tests in time and space, and controlling for other contemporaneous reforms. Searching for mechanisms, we find that the effects seem to operate mainly through reductions in top marginal tax rates and that the share of capital income in top incomes increased after the reforms, indicating that tax avoidance behavior could explain some of the observed effects.

This paper examines the impact of unemployment and inflation on family income shares. Unemployment and inflation are decomposed into their structural (long-term), cyclical (short-term), anticipated and unanticipated components, respectively. I propose a new framework to analyze family income quintile shares by using a two-state Markov-switching model, also known as Hamilton’s regime-switching model. The benefit of using a Markov-switching model is that it permits capturing complex dynamic behavior of non-linear time series macroeconomic variables. The switching mechanism follows a first-order Markov chain of unobservable state variables and subsequent estimated conditional transition probabilities. This paper applies a two-state regime-switching process to capture the asymmetrical effects of unemployment and inflation on family income shares. The two states of family income quintile shares are state 1 (lower income) and state 2 (upper income). This approach differs from previous studies because it examines income inequality within each quintile rather than between quintiles. It is well documented in the literature that there is income inequality between lower and higher income quintiles. Therefore, the analysis of income inequality within the quintile allows for greater insight into changes in family income share corresponding to changes in the state variables. The general findings are that unemployment has adverse effects on lower income shares while inflation acts like a progressive tax on higher income shares.

By analysing a panel of 76 developed and developing countries for period 1980–2014, this paper provides new evidence about the relation between economic freedom and income distribution, measured th...

We propose to introduce inflation via conflicting‐claims, an endogenous labour productivity regime a la Kaldor‐Verdoorn and an explicit account for the labour market into an SFC model that combines an endogenous autonomous expenditure component with the induced investment behaviour of firms. The aim of the paper is to analyse the dynamics of real wage and productivity growth and the impacts on the long run growth trend, income shares and the employment rate of: (a) changes in the propensity to consume; (b) changes in the bargaining power of workers; and (c) changes in the labour productivity under different institutional settings.

This paper looks at the influence of financial deepening (private bank credit) on income inequality in developed economies. Building on a model of financially open economies (Kunieda et al. (Macroecon Dyn 18:1091–1128, 2014)), defining its endogenous economic growth rate, and extending its implications also for top income shares, it is shown that the impact of bank credit on inequality depends on the gap between the real interest rate and the GDP growth rate (‘$$r-g$$ r - g ’). This finding is robustly confirmed by the empirical analysis on a few samples of OECD and EU countries, both for the Gini index and for top income shares. Both the econometric evidence and simple evidence show that the presence of this type of non-linearity (an interaction between financial deepening and $$r-g$$ r - g ) is likely to be one of the reasons for the mixed results that may be found in the empirical literature on the relationship between the financial deepening and income inequality.

A persistent concern about the social consequences of climate change is that large, vulnerable populations will be involuntarily displaced. Existing evidence suggests that changes in precipitation and temperature can increase migration in particular contexts, but the potential for this relationship to evolve over time alongside processes of adaptation and development has not been widely explored. To address this issue, we link longitudinal data from 20 thousand Chinese adults from 1989-2011 to external data on climate anomalies, and use this linked dataset to explore how climatic effects on internal migration have changed over time while controlling for potential spatial and temporal confounders. We find that temperature anomalies initially displaced permanent migrants at the beginning of our study period, but that this effect had reversed by the end of the study period. A parallel analysis of income shares suggests that the explanation might lie in climate vulnerability shifting from agricultural to non-agricultural livelihood activities. Taken together with evidence from previous case studies, our results open the door to a potential future in which development and in-situ adaptation allow climate-induced migration to decline over time, even as climate change unfolds.

Historical inequality is difficult to measure, especially at the subcountry level and beyond the top income shares. This article presents new evidence on the level of inequality in Manhattan from 1880 to 1910 using housing rents. Rental prices and characteristics, including geocodable locations, were collected from newspapers and provide extensive geographic coverage of the island, relevant for the overwhelming majority of its population where renting predominated. This provides a measure of consumption inequality at the household level, which helps to develop the picture of urban inequality for this period, when income and wealth measures are scarce. For large American cities, but particularly for New York, housing made up a large share of consumption expenditure and its consumption cannot be substituted, so this is a reliable and feasible way to identify the true trends in urban inequality across space and time.

The paper analyses the determinant elements of the evolution of labour income share, measured by the size of compensation of employees as a percentage of GDP in twenty European economies. In doing so, special attention is paid to the impact of employment protection legislation. Our study’s results show that the evolution of labour income share is explained by the economic growth, the growth of employment and unemployment rates, and the growth of real wages. Regarding employment protection, only employment protection for temporary workers matters. Our results shows that stricter provisions on the use of fixed-term and temporary agency contracts have a positive impact on the growth of the labour shares.Key words: Employment protection legislation, Labour markets, Labour income share, Income distribution.JEL: C33, E24, E25, F66.

This paper provides an explanation of income dynamics in the posttransition EU countries from the perspective of institutional changes. As a result of seemingly-unrelated regressions analysis on panel data from 1990-2014, we find robust evidence of the relationship between income shares and institutional reforms. The impact of reforms on the top and below-average income shares is negative, whereas this effect on above above-average income share is positive. Decline of income share for the richest class during the post-transitional period can be attributed to the loss of privileges associated with the existence of an institutional vacuum in the first years of transition. Although transition increased wages for workers at the end of income distribution, the job losses had a stronger effect than wage increase, so the overall effect on income share of this group is negative. The winners of reforms appear as the workers with above-average income, whose skills are complementary to the changes instituted by transition to market economy and integration in the EU. [Project of the Serbian Ministry of Education, Science and Technological Development, Grant no. 47010]

This paper studies the effects of globalisation on the income share of the middle class. Our findings suggest that globalisation, proxied by the KOF Economic Globalization Index, reduces the income share of the middle class. The income share of the poorest 20% also drops due to globalisation, while that of the richest 20% increases. We find that only de facto and not de jure measures of globalisation have statistically significant effects on income shares and inequality. Our results are robust for alternative definitions of the middle-class income share and hold for trade and financial globalisation. When we distinguish between groups of countries, we find that our main result is driven by low- and middle-income countries; for high-income countries, we do not find evidence that globalisation has an effect on the income share of the middle class., The World Economy, 45 (1), ISSN:0378-5920, ISSN:1467-9701

Over the past two decades, real wage growth in many OECD countries has decoupled from labour productivity growth, as labour income shares have declined. This paper analyses the drivers of labour share developments using a combination of industry-and firm-level data. Technological change in the investment goods-producing sector and greater global value chain participation have compressed labour shares, but the effect of technological change has been significantly less pronounced for high-skilled workers. Countries with falling labour shares have witnessed both a decline at the technological frontier and a reallocation of market shares toward “superstar” firms with low labour shares. The decline at the technological frontier mainly reflects the entry of firms with low labour shares into the frontier rather than a decline of labour shares in incumbent frontier firms, suggesting that thus far this process is mainly explained by technological dynamism rather than anti-competitive forces., Pak Mathilde, Pionnier Pierre-Alain, Schwellnus Cyrille. Labour Share Developments in OECD Countries Over the Past Two Decades. In: Economie et Statistique / Economics and Statistics, n°510-512, Special Issue 50th Anniversary. pp. 17-34.

Given many popular functional forms for the Lorenz curve do not have a closed-form expression for the Gini index and no study has utilized the observed Gini index to estimate parameter(s) associated with the corresponding parametric functional form, a simple method for estimating the Lorenz curve is introduced. It utilizes 3 indicators, namely, the Gini index and the income shares of the bottom and the top in order to calculate the values of parameters associated with the specified functional form which has a closed-form expression for the Gini index. No error minimization technique is required in order to estimate the Lorenz curve. The data on the Gini index and the income shares of 4 countries that have different level of income inequality, economic, sociological, and regional backgrounds from the United Nations University-World Income Inequality Database are used to illustrate how the simple method works. The overall results indicate that the estimated Lorenz curves fit the actual observations practically well. This simple method could be useful in the situation where the availability of data on income distribution is low. However, if more data on income distribution are available, this study shows that the specified functional form could be used to directly estimate the Lorenz curve. Moreover, the estimated values of the Gini index calculated based on the specified functional form are virtually identical to their actual observations., 9 pages, 10 tables, 1 figure

Using data on couples from the German Socio-Economic Panel (1995–2018), this study investigates how couples’ early career trajectories affect housing outcomes in early adulthood and how this effect is mediated by couples’ joint cumulative income. We apply a life course perspective by identifying dynamic treatments consisting of couples’ consecutive employment statuses and examining their longer-term effects on homeownership and income shares spent on rent. Using multichannel sequence and regression analysis, we find that couples in which both partners have insecure employment trajectories, characterized by frequent spells of fixed-term employment and unemployment, are 25 percentage points less likely to own a home in early adulthood compared to couples with more secure career trajectories. Surprisingly, the couples’ cumulative income does not remarkably mediate this effect, explaining less than one-fifth of the total effect. For couples who do not own their home but rent, we find that couples with insecure careers spend between 2 and 5 percentage points more of their joint income on rent compared to couples where both partners have secure career trajectories. Cumulative income disadvantages mediate the effects on shares of income spent on rent and reduce the effect sizes by 30–40%. Our findings indicate that inequalities caused by early career patterns can accumulate not only over time but also within couples and transfer to other areas of life, exacerbating housing and wealth inequalities in the longer run.

In this article we assess income inequality across French and British colonial empires between 1920 and 1960. For the first time, income tax tabulations are exploited to assess the case studies of French Algeria, Tunisia, Cameroon, and Vietnam, which we compare to British colonies and dominions. As measured by top income shares, inequality was high in colonies. It fell after WWII, but stabilized at much higher levels than in mainland France or the United Kingdom in the 1950s. European settlers or expatriates comprised the bulk of top income earners, and only a minority of autochthons could compete in terms of income, particularly in Africa. Top income shares were no higher in settlement colonies, not only because those territories were wealthier but also because the average European settler was less rich than the average European expatriate. Inequality between Europeans in colonies was similar to (or even below) that of the metropoles. In settlement colonies, the post-WWII fall in income inequality can be explained by a fall in inequality between Europeans, mirroring that of the metropoles, and does not imply that the European/autochthon income gap was reduced.

Between 1953 and 1985 India implemented various progressive taxes on personal wealth. I use estate tax returns to compute top wealth shares (top 1%, top 0.1% and top 0.01%) over 1966-1985; a period marked explicitly by a dirigiste policy environment. These new series suggest that wealth concentration in India reduced substantially during the 1970s. Although the decline affected the entire top 1%, the losses faced by the top 0.01% were especially large. Combined with identical trends in top income shares, it appears that the 1950-80 expropriations of India’s rich had similarities to institutional transitions and shocks faced by European elites in the early to mid twentieth century.

Four alarming stylized facts have recently emerged in the United States: (a) a decline in the labor share of income; (b) a decline in labor productivity; (c) an increase in the top 1% wealth share and (d) an increase in the capital‐income ratio. In Capital in the XXI Century, Thomas Piketty's argument is that the r > g inequality determines an increase in the capital‐income ratio; if the elasticity of substitution in production is above one, the profit share rises. We provide a contrasting explanation that draws from the Post Keynesian approach to differential saving propensities between classes and the Classical‐Marxian theory of induced technical change. In a simple model of “capitalists” and “workers,” we show that institutional changes that lower the labor share—declining unionization, increasing monopsony power in the labor market, the global ‘race to the bottom' in unit labor costs or the exhaustion of path‐breaking scientific discoveries—can reduce labor productivity growth because of the lessened incentives to innovate to save on labor costs. A falling labor share reduces workers' total savings, and wealth concentrates in the capitalists' hands. A higher profit share and wealth share both put pressure on accumulation: but the long‐run growth rate, which is anchored to labor productivity growth, has fallen. To restore balanced growth, the capital‐income ratio must rise, independent of the elasticity of substitution. These tendencies are not inevitable: taxation can be used to implement any wealth distribution targeted by policymakers, while worker‐crushing institutional arrangements can also in principle be reversed through policy. Neither change appears likely given the current institutional and global policy climate.

Using a newly created dataset, this article documents the trends in top income shares for CARICOM member states during the 1960–2015 period. Belize, Suriname, Guyana, Jamaica and Haiti are high-inequality countries as compared to Trinidad & Tobago, The Bahamas, Barbados and St. Lucia. Barbados is the only low-inequality country that is converging to its high-inequality peers, while Belize experiences the greatest decline in top income share. The article argues that differential European settlement and land size are colonial origins explaining why member states are divided into high- and low-inequality groups. However, the article demonstrates the importance of policy for distributional outcomes—like the role of Offshore Financial Centres in the case of Barbados. The paper also shows how structural adjustment policies and natural disasters can account for the volatility observed in top incomes. Finally, the article proposes that the lack of inequality-reducing structural change is an important explanation for the enormous holding power of top incomes across the community.

While various methodologies have been used in the literature to estimate global interpersonal income inequality, the accuracy of these methods has not so far been tested. We compare the accuracy of four methods and find that the Lorenz curve regression method is the most accurate and robust, while the accuracy of the identical quantile income and the Kernel density methods depends on the level of detail about income shares. The simple two-parameter distribution method is also very accurate when either the Log-normal or the Weibull distribution is used. Using the two-parameter distribution method, we show that global income inequality among the citizens of 145 countries declined significantly between 1988 and 2015, largely because of the convergence of income per capita, which was offset to a small degree by the increase in within-country inequalities and the increased population share of poorer and more unequal countries. Regional income inequality declined in most parts of the world, with the notable exception of developing Asia where it has increased. Despite the large increases in within-China and within-India inequality, income convergence of the two countries drove down global income inequality. Without China and India, global interpersonal income inequality in 143 countries was higher in 2015 than in 1988, indicating that more than half of the world has not really become more equal.

Many studies have used tax data to measure the U.S. income distribution, but their results vary widely. For example, in 2014 the top 1 percent share of income is 21.5 percent in Piketty and Saez (2003 and updates), 16.7 percent in the Congressional Budget Office (2018), and 13.1 percent in our analysis. What accounts for such large differences? We provide a step-by-step analysis of how methodological differences affect the results and address issues raised in Piketty, Saez, and Zucman (2018, 2019). Important differences include accounting for declining marriage rates, including social insurance and employer benefits, accounting for tax reforms, and including income missing from tax returns.

We examine the factors explaining the increase in gross and net income inequality in advanced economies since the 1980s. Our results support the view that globalization, technological progress, financial deregulation and lower top marginal tax rates are associated with higher inequality, and we find that the relation between the decline in union density and the rise in top decile income shares—a phenomenon which labour economists have long been discussing—is widespread across advanced economies. The influence of union density on top income shares appears to be causal, as evidenced by our instrumental variable estimates and the inclusion of potentially omitted variables.

Child support guidelines are one of the most explicit, and consequential, public articulations of parents' obligations to their biological children. States must weigh a variety of policy tradeoffs, including issues of equity, transparency, and simplicity. Many states are shifting to “income-shares” guidelines models from “percentage-of-income” models, citing a perceived increase in equity and flexibility. Given additional complexities in implementing the income-shares model, we ask how often, and for whom, alternative guidelines yield substantially different child support orders. We use state administrative data on matched pairs of divorcing parents to simulate expected order amounts for each type of guideline. We find that, despite substantial differences in the information required to implement alternative models, for most families, adopting a different model would result in only modest changes in the amount of child support due. However, in some instances a different model would result in large changes, particularly for relatively low-income fathers.

We analyse top income and wealth shares data, by conducting a robust estimation of trends, tests for structural breaks, and tests for determining persistence. We include Anglo-Saxon countries, continental Europe and Asian countries, grouped under different percentiles and deciles, spanning a period that is at least close to a century. We find that the top income shares for almost all countries are characterised by broken trends, or level shifts. The preponderance of trend breaks appears in the 1970s and 1980s where after a negative trend changes in magnitude or direction. Finally, shocks to the top income share data are not transitory, which have consequences for policy such as advocating redistributive measures.

Multicollinearity widely exists in empirical studies, which leads to imprecise estimation and even endogeneity when omitted variables are correlated with any regressors. We apply an innovative strategy, different from the usual tools (instrumental variable, ridge regression, and least absolute shrinkage and selection operator), to estimate the robust determinants of income distribution. We transform panel data into (quasi-) cross-sectional data by removing country and time effects from the data so that all variables become zero mean and orthogonal to the country dummies and time variable, and multicollinearity becomes very low or even disappears with the quasi-cross sectional data in any specifications regardless of country dummies and time variable being included or not. Our contribution is threefold. First, we build a general method to address the multicollinearity issue in panel data, which is to isolate the common contents of correlated variables and ensures robust estimates in different specifications (dynamic or static specifications) and estimators (within- or between-effects estimators). Second, we find no evidence for the Kuznets hypothesis within and across countries; investment is economically and statistically the most robust determinant of income inequality; meanwhile, labor income share shows robustly and consistently positive effects on income inequality, which challenges the related literature. Last, simulations with our estimates show that the total marginal effects of development (regarding GDP, capital stock and investment) on income inequality are very likely to be positive within and between countries except that the impacts on middle-60% and top-quintile income shares are not so likely to increase income inequality across countries.