| Popis: |
A vast empirical literature implies that increases in unemployment have an aggravating impact on income inequality, whence international and intertemporal inequality comparisons might be sometimes biased. We show how job-search models can be useful in better understanding this fact. In fact, in the classic Burdett and Mortensen (1998) model, as well as in one of its many possible extensions ( Bontemps et al., 2000 ), search frictions are a force pushing the unemployment-inequality correlation in that direction: provided that the unemployment rate is no larger than 15%, a positive correlation between unemployment and inequality unequivocally emerges. |
Full Text from ScienceDirect