Inflation and the Income Share of the Rich: Evidence for 12 OECD Countries

This paper examines the distributional implications of inflation on top income shares in 12 advanced economies using data over the period 1920-2016. We use Local Projections to analyze how top income shares respond to an inflation shock, and panel regressions in which all variables are defined as five-year averages to examine the impact of inflation on the position of the top-one-percent in the long run. Our findings suggest that inflation reduces the share of national income held by the top one percent. Furthermore, we find that inflation shocks and long-run inflation have similar effects on top income shares.

Keywords: inflation, inequality, top income shares, income distribution

JEL Classification: D630, E500, E520

Suggested Citation: Suggested Citation

El Herradi, Mehdi and de Haan, Jakob and Leroy, Aurélien, Inflation and the Income Share of the Rich: Evidence for 12 OECD Countries (2020). CESifo Working Paper No. 8203, Available at SSRN: https://ssrn.com/abstract=3571909 or http://dx.doi.org/10.2139/ssrn.3571909