Income Inequality and Persistence Changes

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 inequality has alternated between stationary and nonstationary regimes during the period 1960-2017 in most countries. These changes are determined by the implementation of structural reforms and by periods of economic and, especially, financial distress. Our findings also suggest that the persistence of income inequality increases with lower tax progressivity, higher income for top earners, and worse working conditions.