Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/208238
Authors: 
Lieberknecht, Philipp
Vermeulen, Philip
Year of Publication: 
2018
Series/Report no.: 
ECB Working Paper 2204
Abstract: 
We estimate the long- and short-run relationship between top income and wealth shares for France and the US since 1913. We find strong evidence for a long-run cointegration relationship governed by relative saving rates at the top. For both countries, we estimate a decline in the relative saving rates at the top - after 1968 in France and 1983 in the US, equivalent to a reduction of the long-run gap between wealth and income inequality compared to the period before. In the short-run, income inequality drives wealth inequality, while the converse link is weaker and slower. Using counterfactual simulations, we find that the recent rise in wealth inequality in the US is largely attributable to the contemporary increase in income inequality. Modest income concentration dynamics and a stronger decline in relative saving rates at the top than in the US contributed to a more subdued rise in wealth inequality in France.
Subjects: 
Income inequality
wealth inequality
VECM
cointegration
top shares
JEL: 
D31
E21
E25
N32
N34
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-3309-4
Document Type: 
Working Paper

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