The study employs original time-frequency techniques to investigate the complex relationship between income distribution and economic growth in France over the period 1915-2016, leveraging the availability of long-run data on various income distribution measures, real GDP per capita and key macroeconomic covariates.
The analysis shows that both the sign and the direction of the relationship between income distribution and economic growth vary depending on the time horizon considered. The association between the two variables is particularly significant in the medium and long term, while it is weaker and quite unstable at business cycle frequencies. In the medium-to-long run, higher GDP growth rates tend to precede a rise in income inequality. In the very long term, however, economic growth appears to benefit from a more equal income distribution, as captured by a higher income share held by the middle class.
