Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/130372
Authors: 
Tanndal, Julia
Waldenström, Daniel
Year of Publication: 
2016
Series/Report no.: 
IZA Discussion Papers 9684
Abstract: 
This study estimates the impact of financial deregulation on top income shares. Using the novel econometric method of constructing synthetic control groups, we show that the "Big Bang"-deregulations in the United Kingdom in 1986 and Japan 1997-1999 increased the share of pre-tax incomes going to top earners by over 20 percent in the U.K. and over 10 percent in Japan. The effect is strongest in the top five percentiles in the U.K. whereas it is mainly driven by the lower part of the top decile in Japan. The findings are robust to placebo tests, alternative ways to construct synthetic controls and scrutiny of post-treatment trends. Higher earnings among financial sector employees appear to be an important mechanism behind this result.
Subjects: 
income inequality
synthetic control method
institutions
JEL: 
D31
G18
H24
J30
N20
Document Type: 
Working Paper

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