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Does Financial Deregulation Boost Top Incomes? Evidence from the Big Bang. (2016). Waldenstrom, Daniel ; Tanndal, Julia .
In: Working Paper Series.
RePEc:hhs:iuiwop:1106.

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  1. Financial Liberalization and Income Inequality: On the Heterogenous Effects of Different Reforms. (2019). Ludwig, Alexander ; Sohail, Faisal ; Slavik, Ctirad ; Monge-Naranjo, Alexander.
    In: 2019 Meeting Papers.
    RePEc:red:sed019:895.

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  2. Inequality and the super-rich. (2018). Waldenstrom, Daniel.
    In: Journal of Income Distribution.
    RePEc:jid:journl:y:2018:v:25:i:1:p:1-14.

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  3. Social Mobility and Brexit: A Closer Look At Englands Left Behind Communities. (2017). Devine, Fiona ; Sensier, Marianne .
    In: The School of Economics Discussion Paper Series.
    RePEc:man:sespap:1709.

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  4. Inequality and the super-rich. (2017). Waldenstrom, Daniel.
    In: Journal of Income Distribution.
    RePEc:jid:journl:y:2017:v:25:i:1:p:1-14.

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  1. A test of the relevance of the capital Quinn index relative to other indices of financial development was made in order to find the best pre-treatment fit of the synthetic control group for the UK. The result of this test for all top income shares is shown in figure A1. The black line represents the synthetic control when the Quinn index is used, and the grey lines represent the current Quinn index, the KAOPEN index, ”Domestic Financial Sector” and ”Stock market liberalization” from Kaminsky and Schmukler (2008), and the variables Entry barriers, Banking supervision, Security markets and Financial Reform from Abiad et al. (2008). All of these measures are discussed in the following section. None of the alternative indices are providing a better pretreatment trend than the Quinn index. In fact, the Root Mean Squared Prediction Error for the Quinn index is smaller than or equal to the RMSPE for all other indices tested, though the differences are very small.
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  2. ” in A. B. Atkinson, T. Piketty (Eds.) (2007) Top Incomes Over The Twentieth Century: A Contrast Between Continental European and English-Speaking Countries. Oxford, Oxford University Press.

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  6. Abadie, A., Diamond, A., and Hainmueller, J. (2011). ”Synth: An R Package for Synthetic Control Methods in Comparative Case Studies.” Journal of Statistical Software 42(i13).
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  7. Abiad, A., Detragiache, E. and Tressel, T. (2008). ”A New Database of Financial Reforms.” IMF Working Paper WP/08/266.

  8. Another factor, one that may be crucial for the likelihood of a large-scale financial deregulation, is of course the previous state of the financial sector. If the financial sector is heavily regulated, or works poorly, politicians may very well want to improve it drastically, ”give it a big bang”. It has unfortunately proven hard to get a good measurement on the performance of financial markets, especially for the U.K. The Financial Development and Structure Dataset by Beck, Demirgüç-Kunt and Levine (2010) does not include any data on the size or efficiency of the British financial sector until after 1989, and the internal data from the London Stock exchange is not available before 1997, which makes it hard to control for the de facto status of the British financial sector. There is, however, data for Japan in terms of the stock market capitalization (Beck et al. 2010a), which will be included as a control variable for Japan.
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  9. Atkinson, A. B. (2007). ”Top Incomes in the United Kingdom over the Twentieth Century.
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  10. Atkinson, A. B. and Piketty, T. (Eds.) (2007). Top Incomes Over The Twentieth Century: A Contrast Between Continental European and English-Speaking Countries. Oxford, Oxford University Press.
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  11. Atkinson, A. B., and Piketty, T. (Eds.). (2010). Top Incomes: A Global Perspective, Oxford: Oxford University Press.

  12. Atkinson, A. B., Piketty, T., Saez, E. (2011). ”Top Incomes in the Long Run of History.” Journal of Economic Literature 49(1): 3–71.
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  17. Beck, T., Demirgüç, A., and Levine, R. (2007). ”Finance, Inequality and the Poor.” Journal of Economic Growth 12(1): 27–49.
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  19. Bellringer, C., and Michie, R. (2014). ”Big Bang in the City of London: An Intentional Revolution or an Accident?” Financial History Review 21(02): 111–137.

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  21. Canada 1980 1980, 1992 Yes Denmark – – Finland – – France 1984, Unequal rules still remain (1996) Germany 1980 Gradual decrease during 1980s. Yes Ireland – – Italy 1983 1990 and 1993 Japan 1979 1993, rest ”to be implemented” (1996) Netherlands – – New Zealand 1984 1985-1987, Stock market liberalization in 1986.
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  22. Canada seems to be a better match for this new, shorter specification, and also Japan and the Netherlands are important composition. Ireland is no longer a relevant control country. For the top 5 and 10 income groups, the political control variables of rightwing executive and top income tax rate fit very well in both the baseline specification in table A7 and in the new specification, table A8. The fit for employment protection and British origin have worsened compared to the baseline model, and so has the fit for the Quinn index, but this is only because of a large change in the U.K. average (the Quinn index defines U.K. as fully liberalized after 1979). The economic indicators of growth and GDP per capita are only slightly improved.
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  23. Centre for Economic Performance, London School of Economics and Political Science, London, U.K. Pagano, M., and Volpin, P. F. (2005). ”The Political Economy of Corporate Governance.

  24. Clarke, G. R., Xu, L. C., and Zou, H. F. (2006). ”Finance and Income Inequality: What Do the Data Tell Us?” Southern Economic Journal 72(3): 578–596.
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  25. Clemons, E. K., and Weber, B. W. (1990). ”London’s Big Bang: A Case Study of Information Technology, Competitive Impact, and Organizational Change.” Journal of Management Information Systems 6(4): 41–60.
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  26. Comin, D. and Hobijin, B. (2009). The Chat Dataset. NBER Working paper 15139.

  27. Crawford, A. J., Ezzell, J. R. and Miles, J. A. (1995). ”Bank CEO Pay-Performance Rrelations and the Effects of Deregulation.” Journal of Business 68(2): 231–256.
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  28. Cuñat, V., and Guadalupe, M. (2009). ”Executive Compensation and Competition in the Banking and Financial Sectors.” Journal of Banking and Finance 33(3): 495–504.
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  29. Demirgüç-Kunt, A., and Levine, R. (2009). ”Finance and Inequality: Theory and Evidence.” Annual Review of Financial Economics 1(1): 287–318.
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  30. Denmark Tax units are individuals over age 15. Interpolated (linearly) for missing years: Y Y Interpolated Excluded Top1: 1973, Top 0.1: 1971, 1973 and 1976.
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  31. Deviation from synthetic control 1970 1980 1990 2000 Year (c) Top 1% -.5 0 .5 1 1.5 2
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  32. Deviation from synthetic control 1970 1980 1990 2000 Year (d) Top 0.1% Note: The black solid line represent the percentage deviation of U.K./Japan from its baseline synthetic control group. Each of the grey lines represent a gap between the true outcome and the synthetic control group for every country in the donor pool (for which no deviations are expected). The donor pool consist of all countries with 0 or positive weight in table 2 and 3.
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  33. Deviation from synthetic control 1980 1990 2000 2010 Year (c) Top 1% -.6 -.1 .4 .9 1.4 Deviation from synthetic control 1980 1990 2000 2010 Year (d) Top 0.1% Note: The black solid line represent the percentage deviation of U.K./Japan from its baseline synthetic control group. Each of the grey lines represent a gap between the true outcome and the synthetic control group for every country in the donor pool (for which no deviations are expected). The donor pool consist of all countries with 0 or positive weight in table 2 and 3.
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  34. During the period of the Japanese Big Bang, there were a few minor deregulations in Spain, Switzerland and the U.S. (registered by the Capital Quinn index for Spain, Improved banking regulation for Switzerland and Decreased entry barriers in the U.S., all in 1999). This is considered a normal pace of deregulations, and having a major effect on the financial industries in these countries.
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  35. Figure 1: Income decomposition of the Top 1 % (a) United Kingdom source: Atkinson (2007) (b) The Japanese Top 1 % income group source: Morichugi and Saez (2008) Table 1: Description of main control variables Controls used Description of variable Source growth Annual GDP growth (%) WDI ** GDPPCcons GDP per capita, constant 2005 USD WDI ** rightwing Right-wing executive DPI, the World Bank.
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  36. Figure 10: Test of control variables - Japan 30 32 34 36 38 40 42 1980 1990 2000 2010 Year (a) Top 10% 19 21 23 25 27 1980 1990 2000 2010 Year (b) Top 5% 7 8 9 10 1980 1990 2000 2010 Year (c) Top 1% 1.4 1.8 2.2 2.6 1980 1990 2000 2010 Year (d) Top 0.1% Note: The black solid line is the true U.K./Japanese trend. The black dashed line is the synthetic control group trend calculated from the baseline set of control variables, and each grey line represent the synthetic control group obtained with a different set of controls. Each combination of controls tested is presented in appendix table A3 and the controls are described in appendix table A2. The different patterns for the grey lines (solid, dashed of dotted) indicate a different set of years are used in the optimisation. The years are listed in appendix table A4.
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  37. Figure 2: The British ”Big Bang” in 1986 25 30 35 40 Top 10 1970 1980 1990 2000 Year (a) Top 10% 18 20 22 24 26 Top 5 1970 1980 1990 2000 Year (b) Top 5% 6 8 10 12 Top 1 1970 1980 1990 2000 Year (c) Top 1% 1 2 3 4
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  38. Figure 3: Percentage Deviation from the Synthetic Control Group Trend, United Kingdom -.2 0 .2 .4 .6 Percentage deviation from synthetic control 1970 1980 1990 2000 Year Top 10% Top 5% Top 1% Top 0.1% Note: Each line represent the percentage size of the gap between the real and the synthetic outcome in figure 2.
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  39. Figure 4: The Japanese Big Bang of 1997-1999 30 32 34 36 38 40 42 Top 10 1980 1990 2000 2010 Year (a) Top 10% 19 21 23 25 27 Top 5 1980 1990 2000 2010 Year (b) Top 5% 7 8 9 10 Top 1 1980 1990 2000 2010 Year (c) Top 1% 1.5 2 2.5 Top 01 1980 1990 2000 2010 Year (d) Top 0.1% Japan Synthetic Japan Note: For each top income share, a synthetic control group (dashed line) is calibrated to match the true trend (solid line) prior to treatment. The trend of the synthetic control represents the trend in Japan in absence of the ”big bang”, and the difference between the two lines is the effect of financial deregulation on the top income share.
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  40. Figure 5: Percentage Deviation from the Synthetic Control Group Trend, Japan -.15 -.05 .05 .15 .25 Deviation from synthetic control 1980 1990 2000 2010 Year Top 10% Top 5% Top 1% Top 0.1% Note: Each line represent the percentage size of the gap between the real and the synthetic outcome in figure 4.
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  41. Figure 7: Placebo tests - United Kingdom -.2 -.1 0 .1 .2 Deviation from synthetic control 1970 1980 1990 2000 Year (a) Top 10% -.2 -.1 0 .1 .2 .3 Deviation from synthetic control 1970 1980 1990 2000 Year (b) Top 5% -.5 0 .5 1
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  42. Figure 8: Placebo tests - Japan -.2 -.1 0 .1 .2 .3 Deviation from synthetic control 1980 1990 2000 2010 Year (a) Top 10% -.2 0 .2 .4 .5 Deviation from synthetic control 1980 1990 2000 2010 Year (b) Top 5% -.4 0 .4 .8 1
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  43. Figure 9: Test of control variables - United Kingdom 25 30 35 40 1970 1980 1990 2000 Year (a) Top 10% 18 20 22 24 26 1970 1980 1990 2000 Year (b) Top 5% 6 8 10 12 1970 1980 1990 2000 Year (c) Top 1% 1 2 3 4 1970 1980 1990 2000 Year (d) Top 0.1% Note: The black solid line is the true U.K./Japanese trend. The black dashed line is the synthetic control group trend calculated from the baseline set of control variables, and each grey line represent the synthetic control group obtained with a different set of controls. Each combination of controls tested is presented in appendix table A3 and the controls are described in appendix table A2. The different patterns for the grey lines (solid, dashed of dotted) indicate a different set of years are used in the optimisation. The years are listed in appendix table A4.
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  44. Figure A1: Robustness of the synthetic control with respect to financial development indices 25 30 35 40 1970 1980 1990 2000 Year (a) Top 10% 18 20 22 24 26 1970 1980 1990 2000 Year (b) Top 5% 6 8 10 12 1970 1980 1990 2000 Year (c) Top 1% 1 2 3 4 1970 1980 1990 2000 Year (d) Top 0.1% Unless data on the real size or efficiency of the financial market or stock market exchange is available, it will be hard to fully prove that one deregulation was more effective than another. Rating the relevance of new policies is always a matter of judgement, and the discrepancy between these different indices is natural, though problematic. Based on previous research (Roine et al., 2009) and the level of detail, we have chosen to use the Quinn index on capital accounts in the baseline specification of the results. The reader is advised to consult appendix A.3 as well as the sources to judge the relative importance of the big bang deregulations.
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  45. Figure A10 shows the marginal tax rates paid by top wage earners in Japan over most of the studied period, using series reported by Moriguchi and Saez (2008), appendix C.30 It can be noted that while the top statutory rate dropped quite notably in 1999, from 47.5 percent to 35 percent (one fourth of the marginal rate), basically nothing happened with the marginal wage income tax paid but virtually all income earners.
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  46. Figure A9: Tax rates for top income earners, U.K. 0 10 20 30 40 50 60 70 Marginal tax rate 1980 1985 1990 1995 2000 Year 90th to 95th percentile 95th to 99th percentile 99th to 99.5th percentile 99th percentile United Kingdom Figure A10: Tax rates for top income earners, Japan 0 10 20 30 40 50 Marginal tax rate 1990 1995 2000 2005 Year 90th percentile 95th percentile 99th percentile 99.9th percentile 99.99th percentile Top marginal tax rate Japan Appendix references Bekaert, G., Harvey, C. R., and Lundblad, C. (2006). ”Growth Volatility and Financial Liberalization.” Journal of International Money and Finance 25(3): 370–403.
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  47. Finland For Top 10 % and Top 0.1 % income share data only available from 1990. Top 5 % Top 5 % No.
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  48. For the U.K., Figure A3 show increasing trends for all countries except the Netherlands, though all trends seem to increase less steeply than the British top income shares. The spike in the Australian data in 1987 is also clearly visible in panels A3.c and A3.d. The synthetic controls for Japan are to some extent ”lifted” by the high top income figures for the U.S., but except for this ant the Spanish top 0.1 percent, all control countries seem to share a stable or mildly increasing trend.
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  51. Gibson, M. S. (2000). ”Big Bang deregulation and Japanese corporate governance: A survey of the issues.” in T. Hoshi, H. Patrick (Eds.) Crisis and Change in the Japanese Financial System, Springer US.
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  57. Hence, to capture this effect for the U.K., some kind of de jure index of financial market liberalization could be used to ensure the preconditions are the same. Studies concerned with the international openness of the financial systems have previously used IMF data on the presence of financial regulations, which is a quite crude measurement on the level of liberalization. This data has been used to construct more detailed indexes, trying to capture the quality of the regulation. The most comprehensive seems to be the Quinn (1997) index, which takes the qualitative aspects of specific regulations into account (Vlachos and Waldenström, 2005). This index will be used in the baseline specification for the test of both the U.K. and the Japanese big bang.
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  58. Hubbard, R. G., and Palia, D. (1995). ”Executive pay and performance evidence from the U.S. banking industry.” Journal of Financial Economics 39(1): 105–130.

  59. In the fourth column, any adjustments to the data (interpolations) made by the authors before using the series is explained. Since the synthetic control method program as created by Abadie et. al. (2011) is unable to handle non-balanced panels or empty values in a series, interpolation becomes necessary. The last column shows the treatment of realized capital gains in the baseline donor pools. An attempt is made to test the effect of realized capital gains in the robustness and mechanism analysis.
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  60. In this section, deregulations in other industries are described, using two different text sources and several indexes of financial liberalization. Summaries of the major deregulations according to OECD (Girouard and Blöndal, 2001) and Williamson and Mahar (1998) are summarized in table A5 and A6. The index values for each country are shown in figure A2.
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  61. Jerzmanowski, M., and Nabar, M. (2013). ”Financial Development and Wage Inequality: Theory and Evidence.” Economic Inquiry 51(1): 211–234.

  62. Kaminsky, G., and Schmukler, S. (2008). ”Short-Run Pain, Long-Run Gain: Financial Liberalization and Stock Market Cycles.” Review of Finance 12(2): 253–292.
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  64. Keefer, 2012 capital quinn Quinn index, Quinn, 1997 restrictions to the Capital account epl Employment protection legislation Nickell, 2006 (OECD data) TopTaxRate The highest marginal inocme tax rate Piketty et al., 2014 SMC GDP Stock market capitalization (% of GDP) Beck,Demirgüç-Kunt and Levin, 2010 ger mom Legal origin: Germany (used for Japan) La Porta et al., 1997 uk mom Legal origin: United Kingdom La Porta et al., 1997 *Unemployment for France and U.K. complemented with national statistics data from INSEE and ONS.
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  66. Lopez, J. A., and Spiegel, M. M. (2014). ”Foreign Entry into Underwriting Services: Evidence from Japan’s ’Big Bang’ Deregulation.” Journal of Money, Credit and Banking 46(2–3): 445–468.

  67. Moriguchi, C., and Saez, E. (2008). ”The Evolution of Income Concentration in Japan, 1886–2005: Evidence from Income Tax Statistics.” Review of Economics and Statistics 90(4): 713–734.

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  69. Norway – – Portugal – – Spain – – Sweden – – Switzerland – – United 1981 1981/82, 1984 and fully removed in 1986 Yes Kingdom (Big Bang) United States 1982 1978, 1995, still controlled (1996) Yes a constant synthetic trend could in fact be created by combining one increasing and one decreasing trend. The assumption that the counterfactual would be a stable path seems less likely in that case. Such false trends do not seem likely in this case however.
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  70. One cause of concern, however, is the Canadian data where a major financial liberalization in banking supervision occurred in 1986. This could bias the results, since Canada is a part of the synthetic control groups for the U.K. top 1 and 0.1 percent income groups. Similarly, there is an increase in the domestic financial sector for Ireland 1986–1987 (Kaminsky and Schmukler’s index), which may be directly related to the deregulations in the neighboring country. If these changes had an impact on financial services in the same way as the British Big Bang, it may cause an underestimation of the impact of the Big Bang on top income shares.
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  71. Philippon, T., and Reshef, A. (2012). ”Wages and Human Capital in the US Finance Industry: 1909–2006.” Quarterly Journal of Economics 127(4): 1551–1607.
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  73. Philippon, Thomas. 2015. ”Has the US Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation.” American Economic Review 105(4): 1408–1438.

  74. Piketty, T., and Saez, E. (2007). ”The evolution of top incomes: a historical and international perspectives.” in Atkinson, A. B. (Ed.). Top incomes over the Twentieth Century: A Contrast between Continental European and English-Speaking Countries, Oxford: Oxford University Press.
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  75. Piketty, T., Saez, E., and Stantcheva, S. (2014). ”Optimal Taxation of Top Incomes: A Tale of Three Elasticities.” American Economic Journal: Economic Policy 6(1): 230–271.

  76. Quinn, D. (1997). ”The Correlates of Change in International Financial Regulation.” American Political Science Review 91(3): 531–551.
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  77. Rajan, R. G., and Zingales, L. (2003). ”The Great Reversals: The Politics of Financial Development in the Twentieth Century.” Journal of Financial Economics 69(1): 5–50.

  78. Roine, J. and Waldenström, D. (2012). ”On the Role of Capital Gains in Swedish Income Inequality.” Review of Income and Wealth 58(3): 569–587.
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  79. Roine, J., Vlachos, J., and Waldenström, D. (2009). ”The Long-Run Determinants of Inequality: What Can We Learn from Top Income Data?” Journal of Public Economics 93(7): 974–988.

  80. Rydqvist, K., Spizman, J., and Strebulaev, I. (2014). ”Government Policy and Ownership of Equity Securities.” Journal of Financial Economics 111(1): 70–85.
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  81. Saez, E., and Veall, M. R. (2005). ”The Evolution of High Incomes in Northern America: Lessons from Canadian Evidence.” American Economic Review 95(3): 831– 849.

  82. Sherman, M. (2009). ”A short history of financial deregulation in the United States.” Center for Economic and Policy Research, 7.
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  83. Since the deregulations of interests in this study concern stock markets and internal financial markets, rather than international openness, neither the Quinn index nor the Chinn-Ito index may capture the relevant effect. Instead, specific indexes for the regulatory environment in these areas, developed by Kaminsky and Schmukler (2003), could be used. These indexes rate the financial environment from one to three, one being the least liberalized (Kaminsky and Schmukler, 2003). The Kaminsky and Schmukler indices will be used for the domestic financial sector and for the stock market, but only in alternative control specifications, since data is unavailable for several countries in the donor pool. Both the Kaminsky-Schmukler and Chinn-Ito indexes will be used in alternative specifications of the control variable, as a robustness test.
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  84. Song, J., Price, D. J., Guvenen, F., Bloom, N., von Wachter, T. (2015). ”Firming Up Inequality.” Mimeo, Stanford University.
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  85. Table A1: Characteristics of international top income data Country Country specific information In donor pool Changes to original data Capital Gains U.K. Jap Australia Capital income included when taxble under income tax (Atkinson et al, 2009) Y Y No Included Canada The U.K. donor pool use data from Saez and Veall (2005), which goes up to year 2000. Y Y Different series Excluded The series is based on tabulated tax data, and relate to adults aged 20+. for U.K. and Japan The Japanese donor pool includes a newer series, which is available from 1982-2010, Constant start for but this is not included in the baseline data in order to avoid a break Japanese data: 1981=1982 in the method of estimation close to the time of treatment.
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  86. Table A5: Important financial deregulations 1 Girouard and Blöndal (2001) Deregulations affecting the housing markets Table 3 Beginning Main deregulation Description Australia 1980 1985 IR Bank specialisation requirements eliminated for large domestic banks in 1980.
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  87. Takahashi, H. (2014). ”The Effect of Bank-firm Relationships on Sell-side Research.” Journal of Financial Services Research 46(2): 195–213.

  88. The Current and Capital Quinn indexes are from the dataset by Quinn (1997), the Chinn-Ito, or Kaopen index is from Chinn and Ito (2008), the specific indexes for reforms in entry barriers, banking supervision and security markets are collected by Abiad et al. (2008) and the domestic financial sector and stock market indexes are taken from Kaminsky and Schmukler (2003). The different indices identify different years as important reform years, and this discrepancy is only partially because of a focus in different areas. Figure A2 show a general trend of less regulations in the financial sector, and the level of liberalization in both the U.K. and Japan prior to their respective big bang seem similar to other countries in the donor pool.
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  89. The figure shows that marginal tax rates dropped sharply for the very top groups in 1988, when the British government effectuated a tax cut. In 1990, the British tax system changed again, this time by moving from joint household taxation to individual taxation (see, e.g., Giles and Johnson, 1994; Atkinson, 2007).
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  90. The figure shows that the rates were flat from the mid-1990s through the 2000s for wage incomes up to and including the 99.9th wage percentile. 29 Specifically, we use data files for historical tax rates over the period 1981–1999 available on their website, and sheets labeled PART I. Taxation of Wage Income. Table I.1. Central government personal income tax rates and thresholds. 30 We use data from Table C3: Wage Income Tax and Marginal Tax Rates in Japan, 1951-2005.
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  91. The last category is an aspect that may be important for the big bang in U.K. that is not discussed in the data section. Since the computerization of the stock exchange was also a part of the big bang (see section 2.2.1) technology may have impacted the likelihood of the big bang occurring. The CHAT database (Comin and Hobijin, 2009) has been consulted to find a good measure of computerization in the financial sector. The CHAT database tracks the amount of technological tools used in a country for a number of different technologies, from agricultural machines to internet usage.
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  92. The tax units are either individuals or families, depending on tax legislation of the country. There is no difference in trends between the two methods, but there may be a difference in the level of the top income share (Atkinson et al., 2009). Hence, this might cause problems if the tax units change during the time period studied. Any breaks in the treatment of tax units is stated in column one.
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  93. The top 1 and 0.1 percentile results are also shown, for completeness. The control years used in the optimization function are presented in column 2 of table A4. In the standard setting both the time period over which the control variables are averaged and the period over which the mean squared prediction error is minimized and set to 1971–1986. In this alternative specification, both of these periods are shortened.
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  94. Top 01 1970 1980 1990 2000 Year (d) Top 0.1% United Kingdom Synthetic United Kingdom Note: For each top income share, a synthetic control group (dashed line) is calibrated to match the true trend (solid line) prior to treatment. The trend of the synthetic control represents the trend in Japan in absence of the ”big bang”, and the difference between the two lines is the effect of financial deregulation on the top income share.
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  95. Toya, T., and Amyx, J.A. (2006). The Political Economy of the Japanese Financial Big Bang: Institutional Change in Finance and Public Policymaking. New York: Oxford University Press.

  96. United Kingdom 1980 Missing Change in unit of taxation (from family to individuals) at 1990. N Top 0.1 Interpolated 1987-1992. Included For the Top 0.1 %, Data is missing in the entire period from 1987 - 1992 where taxable For these years, the time series is interpolated.
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  97. United States 1971 S 1980 IR Interest rate deregulation, phasing out over four years (1980-84) Elimination of portfolio restrictions for thrifts in 1980. Note: IR - deregulation of interest rates. Prior to the deregulations, caps on interest rates charged by retail banks were possible. EEC - Implementation of the European Union’s Second Banking Directive (89/646/EEC) . S - Securitization allowed (The possibility to combine several assets into one instrument, and selling shares of this instrument as a security in order to decrease risks.) A.5 Outcomes of the control group countries To better understand what drives the synthetic control trends, we have looked at the evolution of control variables and top income shares for the countries in the synthetic control groups. First, figures A3 and A4 show the unweighted trends in top incomes for the most important countries in the SCG for each income group.
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  98. Vlachos, J., and Waldenström, D. (2005). ”International Financial Liberalization and Industry Growth.” International Journal of Finance & Economics 10(3): 263–284.

  99. Williams, J. (1988). ”American Democratization Policy for Occupied Japan: Correcting the Revisionist Version.” Pacific Historical Review 57(2): 179–202.
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  100. Williamson, J. and Mahar, M. (1998). ”A Survey of Financial Liberalization.” Essays in International Finance, Department of Economics of Princeton University, No. 211.
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