Income Distribution and Household Saving: A Non-Monotonic Relationship

Konferenzbeitrag

Based on a panel of 29 advanced economies, this paper documents a non-monotonic link between inequality and the aggregate household saving rate. It finds that, at a low level of inequality, more inequality is associated with higher saving; but it also shows that a negative relationship between inequality and saving prevails, where inequality is high. Using different empirical approaches, we locate the turning-point at a net income Gini coefficient around 30. Moreover, we show that the relationship between inequality and saving depends on financial market conditions. While inequality increases saving, when credit is scarce, it tends to reduce saving at high levels of financial depth.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2016: Demographischer Wandel - Session: Applied Microeconomics II ; No. F01-V2

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Personal Income, Wealth, and Their Distributions ; Macroeconomics: Consumption; Saving; Wealth

Contributors, Location and Time

• Event: Geistige Schöpfung
• (who): Scheuermeyer, Philipp ; Bofinger, Peter
• Event: Veröffentlichung
• (who): ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
• (where): Kiel und Hamburg
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/145901
• Last update: 20.09.2024, 8:21 AM CEST