Finance and income inequality: A review and new evidence

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. In contrast with most previous work, our results suggest that all finance variables increase income inequality. The level of financial development conditions the impact of financial liberalization on inequality. Also the quality of political institutions conditions the impact of financial liberalization on income inequality, in contrast to the quality of economic institutions. Our main findings are robust for using random effects, cross-country regressions and legal origin as instrument for financial development. Terms of use: Documents in EconStor mayJEL-Codes: D310, D630, F020, O110, O150.

Income distribution and economic crises

“…44 Robustness tests results are available upon request. 45 This finding supports those reported by de Haan and Sturm (2017), who argue that financial development, commonly measured through cr, increases the inequality-raising effect of financial liberalization. 46 Comprehensive panel data on the top 1 and 5% income shares, as well as relative poverty and wealth distribution, would be extremely valuable for studies of this kind.…”

“…8 Heathcote, Perri, and Violante (2010), Meyer and Sullivan (2012), and Thompson and Smeeding (2013) all point to the rising wage and income inequality in the United States after the GR, despite redistributive fiscal policy and increased access to financial markets. In contrast to studies showing a negative relationship between financial liberalization and income inequality (see, e.g., Beck, Levine, & Levkov, 2010;Bumann & Lensink, 2016), de Haan and Sturm (2017) and de Haan, Pleninger, and Sturm (2018 argue that financial liberalization worsens income inequality, in particular when the financial system is highly developed. 9 See https://inequality.org/facts/income-inequality/ 10 See, for example, Greenwood and Scharfstein (2013).…”

Introduction: What does the future promise for work, employment and society?

“…This phenomenon is closely associated, they argue, with the financialization of the global economy. Financialization, banking crises and other characteristics associated with the financial development of an economy positively correlate with measures of a country's income inequality (de Haan and Sturm, 2017) and reflect a generalized uncoupling of the financial and real economy. This is a serious problem for economic development and the future of work.…”

Introduction – Travail, emploi, société: que nous réserve l'avenir?

“…Phénomène qui, selon eux, est étroitement associé à la financiarisation de l'économie mondiale. Au niveau national, financiarisation, crises bancaires et autres phénomènes liés au développement financier de l'économie apparaissent en corrélation positive avec les indicateurs des inégalités de revenus (de Haan et Sturm, 2017), ce qui reflète un découplage généralisé de l'économie financière et de l'économie réelle. Il s'agit là d'un problème grave pour le développement économique comme pour l'avenir du travail.…”