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Review of Economics and Statistics

Common Trends and Shocks to Top Incomes: A Structural Breaks Approach

Scientific Article in English
Reference
Roine, Jesper and Daniel Waldenström (2011). “Common Trends and Shocks to Top Incomes: A Structural Breaks Approach”. Review of Economics and Statistics 93(3), 832–846. doi.org/10.1162/REST_a_00112

Authors
Jesper Roine, Daniel Waldenström

We use newly compiled top income data and structural breaks techniques to estimate common trends and breaks in inequality across countries over the twentieth century. Our results both confirm earlier findings and offer new insights. In particular, the division into an AngloSaxon and a Continental European experience is not as clear-cut as previously suggested. Some Continental European countries seem to have, experienced increases in top income shares, just as Anglo-Saxon countries have, but typically with a lag. Most notably, Nordic countries display a marked Anglo-Saxon pattern, with sharply increased top income shares, especially when including realized capital gains. Our results help inform theories about the causes of the recent rise in inequality.

Daniel Waldenström

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