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Does Inequality Promote Employment? An International Comparison

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  • Sonja Jovicic

    (Schumpeter School, University of Wuppertal)

  • Ronald Schettkat

    (Schumpeter School, University of Wuppertal)

Abstract

This paper investigates whether the ‘big tradeoff’ between efficiency and inequality exists, and analyzes empirically the relationship between inequality, redistribution, and employment/unemployment. The analysis is based on a cross-country longitudinal data set (panel data) of 21 OECD countries in the period 1980 to 2010. We use inequality and redistribution measures (output indicators) rather than institutional variables (input indicators) as independent variables. We do not find a significant effect of income and wage distribution on labor market performance and cannot confirm the hypothesized ‘big tradeoff’.

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  • Sonja Jovicic & Ronald Schettkat, 2013. "Does Inequality Promote Employment? An International Comparison," Schumpeter Discussion Papers SDP13009, Universitätsbibliothek Wuppertal, University Library.
  • Handle: RePEc:bwu:schdps:sdp13009
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    13. Dan Devroye & Richard B. Freeman, 2001. "Does Inequality in Skills Explain Inequality in Earnings Across Advanced Countries?," NBER Working Papers 8140, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Sonja Jovicic, 2016. "Wage inequality, skill inequality, and employment: evidence and policy lessons from PIAAC," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-26, December.
    2. Sonja Jovicic, 2015. "Schumpeter School International Comparative Institutions Database," Schumpeter Discussion Papers SDP15001, Universitätsbibliothek Wuppertal, University Library.

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