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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Ludwig, Sandra / Schmitz, Hendrik

Ed. by Barigozzi, Francesca / Brunner, Johann / Fleck, Robert / Jürges, Hendrik / Mastrobuoni, Giovanni / Mendola, Mariapia / Requate, Till / de Vries, Frans / Wenzel, Tobias

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CiteScore 2018: 0.54

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Volume 11, Issue 1


Volume 20 (2020)

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Volume 1 (2001)

Do Rising Top Incomes Lift All Boats?

Dan Andrews / Christopher Jencks / Andrew Leigh
Published Online: 2011-01-14 | DOI: https://doi.org/10.2202/1935-1682.2617


Pooling data for 1905 to 2000, we find no systematic relationship between top income shares and economic growth in a panel of 12 developed nations observed between 22 and 85 years. After 1960, however, a one percentage point rise in the top decile’s income share is associated with a statistically significant 0.12 point rise in GDP growth during the following year. This relationship is not driven by changes in either educational attainment or top tax rates. If the increase in inequality is permanent, the increase in growth appears to be permanent. However, our estimates imply that it would take 13 years for the cumulative positive effect of faster growth on the mean income of the bottom nine deciles to offset the negative effect of reducing their share of total income.

This article offers supplementary material which is provided at the end of the article.

Keywords: inequality; growth; income distribution; national income

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Published Online: 2011-01-14

Citation Information: The B.E. Journal of Economic Analysis & Policy, Volume 11, Issue 1, ISSN (Online) 1935-1682, DOI: https://doi.org/10.2202/1935-1682.2617.

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