Nonlinearity and Cross-Country Dependence of Income Inequality

30 Pages Posted: 19 May 2014

See all articles by Tuomas Malinen

Tuomas Malinen

HECER, University of Helsinki

Leena Kalliovirta

University of Helsinki - Department of Statistics

Date Written: May 18, 2014

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 during the last 100 years. Our results indicate that the process of income inequality consists of two equilibriums identifiable by high inequality, high variance and low inequality, low variance. Our results also show that income inequality in the US is the driver of changes in income inequality in other developed economies.

Keywords: top 1% income share, GMAR, developed economies

JEL Classification: C32, C33, D30

Suggested Citation

Malinen, Tuomas and Kalliovirta, Leena, Nonlinearity and Cross-Country Dependence of Income Inequality (May 18, 2014). Available at SSRN: https://ssrn.com/abstract=2438361 or http://dx.doi.org/10.2139/ssrn.2438361

Tuomas Malinen (Contact Author)

HECER, University of Helsinki ( email )

Helsinki, 00014
Finland

Leena Kalliovirta

University of Helsinki - Department of Statistics ( email )

Finland

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
48
Abstract Views
547
PlumX Metrics