Economia Politica

, Volume 32, Issue 1, pp 31–51 | Cite as

Inequality and crises revisited

Article
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Abstract

Recent debate has suggested that growing levels or high levels of inequality may be systematically associated with the occurrence of banking crises. Using the updated version of the Chartbook of Economic Inequality, this paper provides new empirical evidence on the ‘level’ hypothesis and reassesses the empirical validity of the ‘growth’ hypothesis. In line with previous work, the empirical analysis on the entire set of countries and years under investigation does not provide any conclusive and compelling statistical support to either of the hypotheses. However, the apparent statistical insignificance of the findings does not rule out the economic relevance of the question at hand, given that the hypotheses cannot be rejected for important crises and countries such as the US and the UK. Hence, the overall evidence is far from being conclusive and there are several reasons to shed further light on this important research topic.

Keywords

Inequality Financial crisis Top income shares Poverty Wealth 

JEL Classification

D31 D39 G01 
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Notes

Acknowledgments

We acknowledge funding from the INET (IN01100021). This paper has been prepared by SM on the basis of earlier joint research by ABA and SM (2010 and 2011), and of the paper by SM presented at the “Inequality and Economic Performance Conference”, at Columbia University, New York––December 2014. We thank all the participants of the conference for stimulating conversations. We also thank Andrew Berg, Mauro Caselli and Joseph Stiglitz for helpful comments and discussions.

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Copyright information

© Springer International Publishing Switzerland 2015

Authors and Affiliations

  1. 1.Center for Studies in Economics and Finance (CSEF)-University of Naples, Federico IINaplesItaly
  2. 2.Nuffield CollegeUniversity of OxfordOxfordUK
  3. 3.Programme for Economic Modelling, INET OxfordOxfordUK

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