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

Bazillier, Rémi; Héricourt, Jérôme; Ligonnière, Samuel

Type de document :

Article dans une revue scientifique: Article original

DOI :

10.1016/j.euroecorev.2020.103629

Titre :

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

Auteur(s) :

Bazillier, Rémi [Auteur]
Institut Convergences Migrations [Aubervilliers] [IC Migrations]
Université Paris 1 Panthéon-Sorbonne [UP1]
Centre d'économie de la Sorbonne [CES]
Héricourt, Jérôme [Auteur]
Lille économie management - UMR 9221 [LEM]
Centre d'Etudes Prospectives et d'Informations Internationales [CEPII]
Ligonnière, Samuel [Auteur]
Lille économie management - UMR 9221 [LEM]
Bureau d'Économie Théorique et Appliquée [BETA]

Titre de la revue :

European Economic Review

Pagination :

103629

Éditeur :

Elsevier

Date de publication :

2021-02

ISSN :

0014-2921

Mot(s)-clé(s) en anglais :

Credit
Finance
Income inequality
Inequality structure

Discipline(s) HAL :

Sciences de l'Homme et Société/Economies et finances

Résumé en anglais : [en]

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

Langue :

Anglais

Comité de lecture :

Oui

Audience :

Internationale

Vulgarisation :

Non

Collections :

Lille Économie Management (LEM) - UMR 9221

Source :

Harvested from HAL

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