Inequality Consequences of Inflation: Income and Wealth Distribution

While the literature has extensively examined the impacts of inflation on income distribution, relatively little attention has been given to its impact on wealth distribution. Addressing this gap, this paper analyzes inflation's effects on income inequality and wealth inequality, aiming to provide new empirical evidence. Using panel data methodology, the paper analyzes the impacts of inflation on inequalities across 37 OECD countries over the period 1995 to 2022. The impacts of inflation on the top income and top wealth shares are examined at both the panel and country levels. The findings indicate that inflation is associated with higher levels of inequality, with this association being statistically significant in the majority of the countries analyzed. A core result emerging from the study is that the association between inflation and wealth inequality appears stronger than that between inflation and income inequality.