Fri Jan 6 12:50:25 EST 2006
ABSTRACTS IN ECONOMIC HISTORY
(c) 2005 EH.Net
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Name: Gadi Barlevy
Email: gbarlevy at frbchi.org
Institution: Federal Reserve Bank of Chicago
Co-author: Daniel Tsiddon
Tel Aviv University
Faculty of Social Sciences
The Eitan Berglas School of Economics
Ramat Aviv
Tel Aviv 69978
ISRAEL
E-mail: tsiddon at post.tau.ac.il
Title: Earnings Inequality and the Business Cycle
Internet Address of abstracted work:
http://www.cepr.org/pubs/new-dps/dplist.asp?dpno=4451
By mail:
Economic Research Department
Federal Reserve Bank of Chicago
230 South LaSalle
Chicago, IL 60604
USA
Language: English
Abstract:
Economists have long viewed recessions as contributing to increasing
inequality. This conclusion is largely based on data from a period in
which inequality was increasing over time, however. This Paper
examines the connection between long-run trends and cyclical
variation in earnings inequality. We develop a model in which
cyclical and trend inequality are related, and find that in our
model, recessions tend to amplify long-run trends, i.e. they involve
more rapidly increasing inequality when long-run inequality is
increasing, and more rapidly decreasing inequality when long-run
inequality is decreasing. In support of this prediction, we present
evidence that during the first half of the 20th century when earnings
inequality was generally declining, earnings disparities indeed
appeared to fall more rapidly in downturns, at least among workers at
the top of the earnings distribution.
Bibliography: Barlevy, G. and Tsiddon, D. "Earnings Inequality and
the Business Cycle." CEPR Discussion Paper no. 4451. London, Centre
for Economic Policy Research. 2004.
Subject: Q
Geographical Area: 7
Country/Region: United States
Time Period: 8
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