Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/262204
Authors: 
Lieberknecht, Philipp
Vermeulen, Philip
Year of Publication: 
2022
Series/Report no.: 
Economics Working Paper Series No. 2022/02
Publisher: 
Auckland University of Technology (AUT), Faculty of Business, Economics and Law, Auckland
Abstract: 
This paper analyses the joint long-run evolution of wealth and income inequality. We show that top wealth and income shares were cointegrated over the past century in France and the US. We rationalise this finding using a two-agent version of the Solow growth model. In this framework, the co-movement of top wealth and income shares is determined by the relative saving rate at the top, i.e. the ratio of the saving rate of rich individuals to the aggregate saving rate. The cointegration finding suggests that relative saving rates at the top are fairly stable over time, thus explaining the tight co-movement between top wealth and income shares over the past century
Subjects: 
Income inequality
wealth inequality
top shares
saving rates
cointegration
error correction
JEL: 
D31
E21
E25
N32
N34
Document Type: 
Working Paper

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