The Distribution of Top Incomes in Five Anglo‐Saxon Countries Over the Long Run

17 Pages Posted: 21 Jun 2013

See all articles by A. B. Atkinson

A. B. Atkinson

University of Oxford - Nuffield Department of Medicine

Andrew Leigh

Australian House of Representatives Parliament House; Centre for Applied Macroeconomic Analysis, ANU; IZA

Date Written: June 2013

Abstract

Taking five Anglo‐Saxon countries that have relatively similar backgrounds and tax systems – Australia, Canada, New Zealand, the UK and the USA – we see that the shares of the very richest exhibit a strikingly similar pattern, falling in the three decades after World War II, before rising sharply from the mid‐1970s onwards. The share of the top 1 per cent is highly correlated across Anglo‐Saxon countries, more so than with the share of the next 4 per cent. Controlling for country and year fixed effects, we find that a reduction in the marginal tax rate on wage income is associated with an increase in the share of the top percentile group. Likewise, a fall in the marginal tax rate on investment income (based on a lagged moving average) is associated with a rise in the share of the top percentile group.

Suggested Citation

Atkinson, A. B. and Leigh, Andrew, The Distribution of Top Incomes in Five Anglo‐Saxon Countries Over the Long Run (June 2013). Economic Record, Vol. 89, pp. 31-47, 2013, Available at SSRN: https://ssrn.com/abstract=2282948 or http://dx.doi.org/10.1111/1475-4932.12004

A. B. Atkinson (Contact Author)

University of Oxford - Nuffield Department of Medicine ( email )

New Road
Oxford, OX1 1NF
United Kingdom

Andrew Leigh

Australian House of Representatives Parliament House ( email )

Canberra, 2600
Australia

Centre for Applied Macroeconomic Analysis, ANU ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

IZA ( email )

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