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

34 Pages Posted: 15 Apr 2020

See all articles by Mehdi El Herradi

Mehdi El Herradi

LAREFI, University of Bordeaux

Jakob de Haan

University of Groningen - Faculty of Economics and Business; De Nederlandsche Bank; CESifo (Center for Economic Studies and Ifo Institute)

Aurélien Leroy

LAREFI, University of Bordeaux

Date Written: 2020

Abstract

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

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

Mehdi El Herradi (Contact Author)

LAREFI, University of Bordeaux ( email )

Avenue Léaon Duiguit
Bordeaux, 33000
France

Jakob De Haan

University of Groningen - Faculty of Economics and Business ( email )

PO Box 800
Groningen, 9700 AV
Netherlands
+31 0 50 3633706 (Fax)

De Nederlandsche Bank ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Aurélien Leroy

LAREFI, University of Bordeaux ( email )

Avenue Léon Duguit
Pessac, Centre 33400
France

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