On the Positive Correlation between Income Inequality and Unemployment

Cysne, Rubens Penha

doi:10.1162/rest.91.1.218

Cited by 33 publications

(11 citation statements)

References 7 publications

(14 reference statements)

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“…(p. 4) Cingano (2014) found a similar connection between inequality and lack of growth when analyzing Organization for Economic Co-operation and Development countries over the past 30 years. Also, scholars find that economic inequality and unemployment are highly correlated (Cysne, 2009; Sheng, 2011) and that there could be a link between inequality and financial crises (Galbraith, 2012; Rauch, 2012).…”

Section: How Does Economic Inequality Encourage Populism?mentioning

confidence: 99%

The Political Psychology of Inequality and Why It Matters for Populism

Oxendine

2019

International Perspectives in Psychology

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Integrating research from political science, psychology, and related fields, this article analyzes the complex web of relationships and pathways connecting economic inequality to populism. What emerges is an original theoretical framework for understanding populist support, which distinguishes between levels of analysis and considers how economic and cultural influences interact (rather than placing them at odds). It also emphasizes the important distinction between reality and perception and its role in understanding how citizens react differently to the same macrolevel trends and environmental threats. Careful analysis of the existing scholarship suggests that economic stratification exerts an indirect influence on populist support. Inequality likely shapes populist beliefs through macrolevel mediators such as economic dysfunction, rising political polarization, and a decline in the quality of government. Also, several potential individual-level influences mediate the relationship, including heightened sense of intergroup threat, political distrust, status anxiety, and perceptions of system unfairness. This article’s theoretical framework also explores how community environment and relevant personality characteristics like right-wing authoritarianism and social dominance orientation may moderate important associations.

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Section: How Does Economic Inequality Encourage Populism?mentioning

confidence: 99%

The Political Psychology of Inequality and Why It Matters for Populism

Oxendine

2019

International Perspectives in Psychology

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“…Nonetheless, this impact turns into negative when the COVID-19 sub-sample is considered, and it is always significant. This means that, while in general the official interest rates hurts the employment of the economy, during the COVID times an increase in the interest rates would reduce un-employment, and then, help to reduce inequality because they are proxies (Cysne, 2009;Peña, 2021). According to this, it is empirically checked that rising reference rates could improve the economy during the COVID-19 pandemic, as in the B case of equation ( 29), because the most affected people in this pandemic have been small businesses that had to borrow, at least at the beginning, instead of the lowest-income people.…”

Section: Discussion Of the Results And Empirical Evidencementioning

confidence: 99%

Raising Interest Rates for Improving Income

Peña

2023

Journal of Central Banking Theory and Practice

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This paper illustrates a case where an increase of the interest rates improves the economic activity and reduces income inequality. This theoretical exercise deals with a simple model of disequilibrium with accountant identities of budget constraints. In addition, and following previous models, the effect of the COVID-19 shock is considered, by reflecting asymmetric repercussions that increase income inequality. A simple empirical exercise confirms some of the previous results. The proposed explanation is that, for the euro area, this shock has affected more middle-income households such as the retailers harmed by the compulsory lockdown who have increased their debts.

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“…Another important aspect of income inequality and poverty is their close ties to the labour market conditions. To begin with, a vast collection of literature documents the influence of unemployment on inequality and poverty (e.g., Mocan 1999;Cysne 2009;Zandi et al 2022). In our study, unemployment has a significant positive correlation with the risk of poverty, although we do not find evidence that it significantly affects either of our other inequality measures.…”

Section: Discussionmentioning

confidence: 99%

The Impact of Recent Economic Crises on Income Inequality and the Risk of Poverty in Greece

et al. 2023

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We consider the impact of the two recent economic crises, one that resulted from the great recession of 2007–2009 and one following the COVID-19 pandemic, on income inequality and the risk of poverty in Greece. To this end, we also investigate the key macroeconomic variables affecting the Greek income distribution. We find that alternative measures of inequality and relative poverty have deteriorated during the years of crises, implying that the country’s response to economic shocks has been particularly harmful for its more disadvantaged citizens. Regarding the variables affecting the income distribution, we show that income inequality and the risk of poverty increase with growth, implying that the benefits of growth, and burdens of recession, are distributed unequally among members of the Greek society. Moreover, inequality appears to increase with unemployment and decrease with the share of wages and salaries in total income. This finding highlights the importance of labour market regulations and workers’ welfare for attaining equality. Finally, we provide evidence that, during pre-election periods, income inequality is reduced, meaning that the political budget cycles, which are characteristic of the Greek economy, generate gains in terms of equality, but these gains are short-lived and mainly benefit the middle bracket of the income distribution.

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On the Positive Correlation between Income Inequality and Unemployment

Cited by 33 publications

References 7 publications

The Political Psychology of Inequality and Why It Matters for Populism

The Political Psychology of Inequality and Why It Matters for Populism

Raising Interest Rates for Improving Income

The Impact of Recent Economic Crises on Income Inequality and the Risk of Poverty in Greece

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