The Spillover Effects of Top Income Inequality

72 Pages Posted: 19 Jun 2023 Last revised: 3 Jul 2023

See all articles by Joshua D. Gottlieb

Joshua D. Gottlieb

National Bureau of Economic Research (NBER); University of Chicago

David Hémous

University of Zürich; Centre for Economic Policy Research (CEPR)

Jeffrey Hicks

University of Toronto

Morten Olsen

University of Copenhagen

Multiple version iconThere are 2 versions of this paper

Date Written: June 2023

Abstract

Top income inequality in the United States has increased considerably within occupations. This phenomenon has led to a search for a common explanation. We instead develop a theory where increases in income inequality originating within a few occupations can "spill over" through consumption into others. We show theoretically that such spillovers occur when an occupation provides non-divisible services to consumers, with physicians our prime example. Examining local income inequality across U.S. regions, the data suggest that such spillovers exist for physicians, dentists, and real estate agents. Estimated spillovers for other occupations are consistent with the predictions of our theory.

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Suggested Citation

Gottlieb, Joshua D. and Gottlieb, Joshua D. and Hemous, David and Hicks, Jeffrey and Olsen, Morten, The Spillover Effects of Top Income Inequality (June 2023). NBER Working Paper No. w31366, Available at SSRN: https://ssrn.com/abstract=4483667

Joshua D. Gottlieb (Contact Author)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://papers.nber.org/authors/joshua_gottlieb

University of Chicago ( email )

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Chicago, IL 60637
United States

HOME PAGE: http://www.gottlieb.ca/

David Hemous

University of Zürich ( email )

Zürich
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Jeffrey Hicks

University of Toronto ( email )

Toronto, Ontario M5S 3G7
Canada

HOME PAGE: http://https://jeffrey-hicks.com/

Morten Olsen

University of Copenhagen ( email )

Copenhagen
Copenhagen
Denmark

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