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The impact of unemployment on inequality and poverty in OECD countries

Author

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  • Rosa Martínez
  • Luis Ayala
  • Jesús Ruiz‐Huerta

Abstract

The purpose of this research is to examine the contribution of unemployment to income inequality and poverty in various OECD countries. These relationships have been explored using Luxembourg Income Study micro‐data. Considerable differences across OECD countries are revealed through the use of within‐household unemployment distributions. These differences help to explain most of the observed divergences in the relationship between unemployment and income distribution, in conjunction with the heterogeneous influence of social benefits on the economic position of the unemployed in these countries. A sub‐group decomposition analysis corroborates the limited effect of unemployment on income distribution in most of the considered countries. However, it seems clear that the unemployed are among those with the highest risk of experiencing poverty. JEL classification: D31, I32, J31.

Suggested Citation

  • Rosa Martínez & Luis Ayala & Jesús Ruiz‐Huerta, 2001. "The impact of unemployment on inequality and poverty in OECD countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 9(2), pages 417-447, July.
    • Handle: RePEc:bla:etrans:v:9:y:2001:i:2:p:417-447
    DOI: 10.1111/1468-0351.00082
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    Cited by:

    1. Jaejoon Woo & Elva Bova & Tidiane Kinda & Y. Sophia Zhang, 2017. "Distributional Consequences of Fiscal Adjustments: What Do the Data Say?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 65(2), pages 273-307, June.
    2. Kevin Pineda‐Hernández & François Rycx & Mélanie Volral, 2022. "How collective bargaining shapes poverty: New evidence for developed countries," British Journal of Industrial Relations, London School of Economics, vol. 60(4), pages 895-928, December.
    3. Djeneba Doumbia, 2019. "The quest for pro-poor and inclusive growth: the role of governance," Applied Economics, Taylor & Francis Journals, vol. 51(16), pages 1762-1783, April.
    4. Bojanic, Antonio N., 2018. "The impact of fiscal decentralization on growth, inflation and inequality in the Americas," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    5. Carola Grün & Stephan Klasen, 2003. "Growth, Income Distribution, and Well-Being: Comparisons across Space and Time," CESifo Working Paper Series 837, CESifo.
    6. Dwumfour, Richard Adjei & Pan, Lei & Harris, Mark N., 2023. "FDI and development redux: Is R&D a substitute for FDIs?," MPRA Paper 116117, University Library of Munich, Germany.
    7. Iman Cheratian & Saleh Goltabar & Luis A. Gil-Alaña, 2023. "The unemployment hysteresis by territory, gender, and age groups in Iran," SN Business & Economics, Springer, vol. 3(2), pages 1-18, February.
    8. Obadiah Jonathan Gimba & Mehdi Seraj & Huseyin Ozdeser, 2021. "What drives income inequality in sub‐Saharan Africa and its sub‐regions? An examination of long‐run and short‐run effects," African Development Review, African Development Bank, vol. 33(4), pages 729-741, December.
    9. Johansson, Anders C. & Wang, Xun, 2014. "Financial sector policies and income inequality," China Economic Review, Elsevier, vol. 31(C), pages 367-378.
    10. Sèna Kimm Gnangnon, 2022. "Does Poverty Matter for Tax Revenue Performance in Developing Countries?," South Asian Journal of Macroeconomics and Public Finance, , vol. 11(1), pages 7-38, June.
    11. Abd Azis Muthalib & Pasrun Adam & Rostin Rostin & Zainuddin Saenong & La Ode Suriadi, 2018. "The Influence of Fuel Prices and Unemployment Rate towards the Poverty Level in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 8(3), pages 37-42.
    12. Djeneba Doumbia & Mr. Tidiane Kinda, 2019. "Reallocating Public Spending to Reduce Income Inequality: Can It Work?," IMF Working Papers 2019/188, International Monetary Fund.
    13. Muhammad Saeed Meo & Bezon Kumar & Sumayya Chughtai & Vina Javed Khan & Muhammad Khyzer Bin Dost & Qasim Ali Nisar, 2023. "Impact of Unemployment and Governance on Poverty in Pakistan: A Fresh Insight from Non-linear ARDL Co-integration Approach," Global Business Review, International Management Institute, vol. 24(5), pages 1007-1024, October.
    14. Conrad Scheibe, 2016. "Fiscal Consolidations and Their Effects on Income Inequality," UCL SSEES Economics and Business working paper series 2016-4, UCL School of Slavonic and East European Studies (SSEES).
    15. Egla Mansi & Eglantina Hysa & Mirela Panait & Marian Catalin Voica, 2020. "Poverty—A Challenge for Economic Development? Evidences from Western Balkan Countries and the European Union," Sustainability, MDPI, vol. 12(18), pages 1-24, September.
    16. Ferreira de Mendonça, Helder & Martins Esteves, Diogo, 2014. "Income inequality in Brazil: What has changed in recent years?," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    17. Peter Mandzak, "undated". "The Impact of Fiscal Consolidation on Inequality:The Case of V4 Countries," Department of Economic Policy Working Paper Series 015, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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