On the long-run dynamics of income and wealth inequality

Abstract

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.