A case Study on Asymmetric Evidence About the Impact of Income Fluctuations on Income Distribution (a Case Study of Published Data From an American State)

A previous study that attempted to assess the impact of income volatility on income inequality in the United States used state-level data and a balanced panel model to conclude that increased volatility worsened the distribution of incomes in the United States. , which indicates that reduced volatility should reduce inequality. We use the same data set that spans nine years and revisit the issue using linear and non-linear ARDL time series models to show that the above conclusion does not hold for all states. While we find asymmetric effects of short-run income fluctuations on the measure of inequality in most states, they translate into long-run asymmetric effects in only ۱۶ states. Both cases of increased volatility and decreased volatility appear to have un equalizing effects on income distribution in these states.

Keywords:

Income Distribution , Income Volatility , Asymmetry , State Level Data , United States