On the positive correlation between income inequality and unemployment
Two papers published in this journal (Jantti, 1994, and Mocan, 1999), among others, find empirical evidence that "increases in structural unemployment have a substantial aggravating impact on income inequality." The main point of this work is to show that standard job-search models can help us understand this empirical regularity. As a byproduct of the analysis, the paper also provides a closed-form general expression that enables direct calculation of the Gini coefficient of wage-income inequality as a function of any arbitrary initial distribution of wage offers. Three numerical examples illustrate the results. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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- Blinder, Alan S & Esaki, Howard Y, 1978. "Macroeconomic Activity and Income Distribution in the Postwar United States," The Review of Economics and Statistics, MIT Press, vol. 60(4), pages 604-09, November.
- McCall, John J, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, MIT Press, vol. 84(1), pages 113-26, February.
- Nolan, Brian, 1986. "Unemployment and the Size Distribution of Income," Economica, London School of Economics and Political Science, vol. 53(212), pages 421-45, November.
- Charles M. Beach, 1974.
"Cyclical Sensitivity of Aggregate Income Inequality,"
162, Queen's University, Department of Economics.
- Beach, Charles M, 1977. "Cyclical Sensitivity of Aggregate Income Inequality," The Review of Economics and Statistics, MIT Press, vol. 59(1), pages 56-66, February.
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