Structure of income inequality and household leverage: Cross-country causal evidence

نویسندگان

چکیده

How does income inequality and its structure affect credit? Based on various strands of the literature, we hypothesize that rising should lead to higher household credit at aggregate level, a substantial part this effect be driven by impoverishment middle class relative top-income households. These intuitions are empirically confirmed study based country-level dataset over period 1970–2017. To identify exogenous variations in inequality, develop an instrumental variable approach two types instruments: total number ratified ILO conventions factor endowments. Our results show have positive impact credit: one-standard-deviation increase Gini index generates 5- 8- percentage-point expansion ratio GDP. In addition, is 1.5–1.8 times stronger when top earners rather than earners’ incomes expense lowest percentiles distribution. Those robust sets instruments, databases, controls, definitions. They also consistently disappear countries where financial markets insufficiently developed.

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ژورنال

عنوان ژورنال: European Economic Review

سال: 2021

ISSN: ['1873-572X', '0014-2921']

DOI: https://doi.org/10.1016/j.euroecorev.2020.103629