The response of household incomes to stock price and GDP growth by income quantile†

Abstract

How household incomes respond to GDP and stock price growth is important for an understanding of the economic costs of business cycles and the driving forces of income inequality over time. This article examines to what extent household incomes react differently across income distribution quantiles and time. It employs U.S. Panel Study of Income Dynamics data for the period 1979–2000 and quantile regression techniques. Significant differences are found in how household incomes respond across income quantiles. For the same income quantiles, large differences are identified when the time period 1979–1987 is compared to 1988–2000. †The content of the article reflects the personal opinion of the authors and should not be associated with FedEx Services or any of its affiliated companies.