Top Income Shares in Greece from Dictatorship to Crisis: 1967-2017

Top Income Shares in Greece from Dictatorship to Crisis: 1967-2017

The paper calculates the top income shares in Greece from 1967 (the seizure of power by the military dictatorship) until 2017 (the aftermath of the debt crisis). This long-run perspective allows for the examination of the relationship between inequality and institutional transformations, namely democracy, finance and crisis. We find in particular that (a) transition to democracy did not affect the income share of the top decile, whereas social democracy had a significant negative impact (b) financial development and liberalization substantially increased all top decile shares (c) debt crisis, consolidation and recession were beneficial for the upper ranks of the top decile.

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The paper calculates the top income shares in Greece for the period 1967-2017 using administrative tax data, national accounts and the properties of the Pareto distribution. We report the income share of the top 10 percent of the population (top decile) which we decompose further to the top 10-6 percent, the top 5-2 percent, the top 1 percent (top percentile) and the top 0.1 percent. This provides an overview of the aggregate distribution of pre-tax income between the "broadly" rich and the rest of the population as well as the internal composition between high, middle and lower ranks of the rich.

This half-century-long perspective allows an examination of the extent to which broader historical developments have affected the evolution of income distribution. Indeed, during this long period, Greece has undergone substantial political and economic transformations that would presumably play critical role. In order to frame these transformations, we divide our period into six shorter ones, according to more or less discreet political and institutional arrangement. Hence we have the ``Dictatorship" 1967-1974, the ``Democracy" 1974-1981, the ``Social Democracy" 1981-1989, the ``Stabilisation/ Finance" 1989-2001, the ``Eurozone" 2001-2009 and the ``Crisis" 2009-2017. Evidently, this periodisation has some degree of arbitrariness and the periods overlap, but it provides adequate ground for our purposes. Moreover, the respective cut-off dates are broadly consistent with structural breaks in our income shares series.

Our main findings can be summarized as follows: The transition to democracy in 1974 did not have any significant impact on the top decile share as it broadly continued the trends that were already present in the dictatorship. However, the period of social democracy achieved a major redistribution away from the top decile leading to historical low levels. This was reversed during the economic stabilization and financial development and liberalization of the 1990s when the top decile fully recovered its previous losses. Finally, the debt crisis and the subsequent recession were beneficial for the top decile (especially the higher ranks) but the recovery seems to work at the opposite direction.

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