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Unemployment Shocks and Income Distribution: How did the Nordic Countries Fare during their Crises?

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Listed:
  • Rolf Aaberge
  • Tom Wennemo
  • Anders Bjorklund
  • Markus Jantti
  • Peder J. Pedersen
  • Nina Smith

Abstract

We study the inequality of disposable income in Denmark, Finland, Norway and Sweden during the late 1980s and early 1990s when unemployment rose dramatically in all four countries. A standard measure of inequality — the Gini coefficient – was surprisingly stable in all countries during this period. By decomposing the Gini into income components, we test hypotheses about the reasons for this stable income distribution. Our most straightforward hypothesis, that rising unemployment benefits counteracted the impact of more unequally distributed earnings, receives only limited support. More complex mechanisms seem to have been at work. JEL classification: D30; D31; J60

Suggested Citation

  • Rolf Aaberge & Tom Wennemo & Anders Bjorklund & Markus Jantti & Peder J. Pedersen & Nina Smith, 2000. "Unemployment Shocks and Income Distribution: How did the Nordic Countries Fare during their Crises?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 77-99, March.
    • Handle: RePEc:bla:scandj:v:102:y:2000:i:1:p:77-99
    DOI: 10.1111/1467-9442.00185
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    References listed on IDEAS

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    1. Dex, Shirley, et al, 1995. "Cross-National Comparisons of the Labour Force Participation of Women Married to Unemployed Men," Oxford Economic Papers, Oxford University Press, vol. 47(4), pages 611-635, October.
    2. Rolf Aaberge & Iulie Aslaksen, 1996. "Decomposition of the Gini Coefficient by Income Components: Various Types of Applications and Interpretations," Discussion Papers 182, Statistics Norway, Research Department.
    3. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-156, February.
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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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