Abstract

http://ssrn.com/abstract=1603369
 
 

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Do Rising Top Incomes Lift All Boats?


Dan Andrews


OECD

Christopher Jencks


Harvard University - Harvard Kennedy School (HKS)

Andrew Leigh


Australian National University - Economics Program, Research School of Social Sciences


IZA Discussion Paper No. 4920

Abstract:     
Pooling data for 1905 to 2000, we find no systematic relationship between top income shares and economic growth in a panel of 12 developed nations observed for between 22 and 85 years. After 1960, however, a one percentage point rise in the top decile's income share is associated with a statistically significant 0.12 point rise in GDP growth during the following year. This relationship is not driven by changes in either educational attainment or top tax rates. If the increase in inequality is permanent, the increase in growth appears to be permanent. However, our estimates imply that it would take 13 years for the cumulative positive effect of faster growth on the mean income of the bottom nine deciles to offset the negative effect of reducing their share of total income.

Number of Pages in PDF File: 61

Keywords: inequality, growth, income distribution, national income

JEL Classification: D31, N10, O57

working papers series


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Date posted: May 10, 2010  

Suggested Citation

Andrews, Dan and Jencks, Christopher and Leigh, Andrew, Do Rising Top Incomes Lift All Boats?. IZA Discussion Paper No. 4920. Available at SSRN: http://ssrn.com/abstract=1603369

Contact Information

Dan Andrews (Contact Author)
OECD ( email )
2 rue Andre Pascal
Paris Cedex 16, MO 63108
France
Christopher Jencks
Harvard University - Harvard Kennedy School (HKS) ( email )
79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-0546 (Phone)
617-496-9053 (Fax)
Andrew Leigh
Australian National University - Economics Program, Research School of Social Sciences ( email )
HC Coombs Building
Australian National University
Canberra, Australian Capital Territory 0200
Australia
+61261251374 (Phone)
+61261250182 (Fax)
HOME PAGE: http://econrsss.anu.edu.au/~aleigh/
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