Much effort has been devoted to exploring the consequence of population aging on economic growth. Little attention is paid to its impact on income and wealth inequality. This is critical because inequality matters for the distribution of economic resources and social welfare and is interlinked to economic growth. To fill the void, this paper evaluates whether population aging affects inequality, with special emphasis on wealth inequality and nonlinearity. In a cross-country panel data setting, it finds that top wealth shares follow a U path, i.e., decrease and then increase, in the process of population aging. By contrast, the bottom wealth shares have an inverted-U pattern, i.e., rise and then fall, when a population ages. Similar results are reached for the income share. The data thus suggest that there exists some threshold level of population aging such that any deviations from that level will widen the gap between the wealthy and the poor and increase disparities in wealth and income inequality.
