Abstract
This paper carries out a time series analysis of the Gini coefficient for disposable income in a sample that includes both advanced and emerging economies. Our results show that, in most countries, inequality has alternated between stationary and nonstationary regimes during the period 1960–2017. These changes coincide with the implementation of structural reforms and with periods of economic and, especially, financial distress. Our findings also suggest that the persistence of income inequality seems to be related to tax progressivity, income for top earners, and working conditions.
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Notes
See Makhlouf (2018) for a related study based on the implementation of univariate time series methods that assume a single change in the deterministic component.
Version 7.1 (August 2018), available at https://fsolt.org/swiid/.
Canada, France, Germany, Italy, Japan, United Kingdom (UK) and US.
Brazil, China, India, Mexico and South Africa.
± 1.96 times the standard deviation.
This lack of evidence against the null hypothesis may also be related to the fact that unit root test statistics display low power when applied to short time series with a yearly frequency. This problem can be mitigated through the application of panel unit root tests that exploit both the cross-sectional and the temporal dimensions of the data. Nonetheless, the present study is confined to a time series approach because it allows us to analyze the possible presence of persistence changes in disposable income inequality.
Gil-Alana et al. (2019) have also pointed at policies as a source of inequality persistence.
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Acknowledgements
The authors have benefited from the valuable comments of an anonymous reviewer. Financial support from Gobierno de Aragón (S39-17R ADETRE Research Group), Ministerio de Economía, Industria y Competitividad (Project ECO2017-82246-P), and Universidad de Zaragoza/Centro Universitario de la Defensa (Project UZCUD2019-SOC-06) is also acknowledged.
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Sanso-Navarro, M., Vera-Cabello, M. Income Inequality and Persistence Changes. Soc Indic Res 152, 495–511 (2020). https://doi.org/10.1007/s11205-020-02444-2
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DOI: https://doi.org/10.1007/s11205-020-02444-2