20 Years of Arnoldshain Seminar
“20 Years of Challenges for Integration, Globalization, and Development”
September 14 – 18, 2015
Frankfurt and Arnoldshain / Taunus

Dimelis, Sophia    
AbstracttitleAn ARDLapproach to explain income inequality: An analysis of top income hares in Greece
Coco-authored with Chrissis, K., Livada, A.
ShortabstractIn this paper the empirical findings of the response of top income shares to changes in macroeconomic activity in Greece for the period 1960 to 2009 are discussed. Following the Piketty (2001) methodology, the upper income shares estimates are based on income tax statistics. Current literature on income distribution utilizes tax data in order to study top income shares. This study employs the Autoregressive Distributed Lag (ARDL) (or bounds testing) cointegration procedure for the empirical analysis of the long-run relationship and dynamic interacting among the variables of interest. The empirical findings suggest that economic development has played an equalizing role for Greece in the long-run as documented by its negative impact on the very upper income shares (1% and 2%). This result however is not uniform as it does not hold for the 5% upper share. Trade liberalization of the Greek economy has increased inequality, except for the 5% upper share where the long-run relationship does not seem to hold. The empirical findings further suggest that inflation reduces income inequality in the long run as documented by almost all proxies, again with the exception of the 5% top income share (no relationship). Finally, the financial development and population seem to exert no effect on the three top income shares in the long run.