Does income inequality increase marginal propensity to consume?

Dong Eun Rhee, Hyoungjong Kim

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)


This article empirically investigates the effects of income inequality on the marginal propensity to consume (MPC), using panel data of 22 OECD countries over the period 1994–2015. We find that MPC increases dramatically as income inequality increases. In subsample analyses, the MPC of a high inequality group is more than twice that of a low inequality group.

Original languageEnglish
Pages (from-to)1218-1221
Number of pages4
JournalApplied Economics Letters
Issue number17
Publication statusPublished - 2018 Oct 7

Bibliographical note

Funding Information:
This work was supported by the Korea University [K1520711].

Publisher Copyright:
© 2017, Informa UK Limited, trading as Taylor & Francis Group.


  • Income inequality
  • Marginal propensity to consume
  • consumption function

ASJC Scopus subject areas

  • Economics and Econometrics


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