Income inequality and the savings rate

Our initial idea is that if income inequality rises, the household savings rate rises, because the propensity to save is higher for high incomes. So when low wages stagnate and capital income rises sharply, we expect to see a rise in the household savings rate. This idea is important, as the outlook for the savings-investment equilibrium is predicted in order to predict that for interest rates. We test this idea by: Looking at trends over time in the United States, the euro zone and Japan; Comparing OECD countries, bearing in mind that differences between savings rates can also result from demographics and the generosity of social welfare; We find that Japan is the only country where there is a positive link over time between income inequality and the savings rate. This link is therefore mostly non-existent.