Is income inequality persistent? Evidence using panel stationarity tests, 1870-2011

Using data on inequality for 21 OECD countries over the period 1870-2011 this paper tests the Piketty hypothesis that income inequality is likely to grow in the 21st century. It is shown that the null hypothesis of trend stationarity of inequality cannot be rejected at conventional significance levels, suggesting that shocks to income inequality are likely to be temporary.