The impact of unemployment on inequality and poverty in OECD countries

Abstract

The purpose of this research is to examine the contribution of unemployment to income inequality and poverty in various OECD countries. These relationships have been explored using Luxembourg Income Study micro‐data. Considerable differences across OECD countries are revealed through the use of within‐household unemployment distributions. These differences help to explain most of the observed divergences in the relationship between unemployment and income distribution, in conjunction with the heterogeneous influence of social benefits on the economic position of the unemployed in these countries. A sub‐group decomposition analysis corroborates the limited effect of unemployment on income distribution in most of the considered countries. However, it seems clear that the unemployed are among those with the highest risk of experiencing poverty. JEL classification: D31, I32, J31.

The impact of fiscal decentralization on growth, inflation and inequality in the Americas

“…There is convincing evidence that greater urbanization, openness to international trade, larger government and higher unemployment worsen income inequality, as reflected in the consistently positive and statistically significant coefficients for these variables. These results fall neatly into line with findings elsewhere (see, for instance, Rodríguez and Rodrik, 1999;Lee, 2005;Martínez, Ayala and Ruiz-Huerta, 2001) that urbanization, open markets, an increasingly active government and higher unemployment are the principal drivers of greater income inequality. Savings and remittances, on the other hand, seem to be conducive to greater income equality, reflected in consistently negative and statistically significant coefficients, a result that is equally unsurprising given the importance of deferred consumption and alternative sources of income as instruments for repressing income inequality.…”

El efecto de la descentralización fiscal sobre el crecimiento, la inflación y la desigualdad en América

“…Hay pruebas convincentes de que el aumento de la urbanización, la apertura al comercio internacional, el mayor tamaño del gobierno y el incremento del desempleo agravan la desigualdad de los ingresos, como se refleja en los coeficientes correspondientes a esas variables, que de forma sistemática son positivos y estadísticamente significativos. Estos resultados están en perfecta consonancia con las conclusiones de otros estudios (véase, por ejemplo, Rodríguez y Rodrik, 1999;Lee, 2005;Martínez, Ayala y Ruiz-Huerta, 2001), según las cuales la urbanización, la apertura de los mercados, el aumento de la actividad del gobierno y el mayor desempleo son los principales impulsores de la desigualdad de los ingresos. El ahorro y las remesas, por otra parte, parecen favorecer una mayor igualdad de los ingresos, lo que se observa en los coeficientes que, de forma constante, son negativos y estadísticamente significativos.…”

Income inequality in Brazil: What has changed in recent years?

“…The basic idea is that unemployment tends to affect the less skilled and the low-paid more than other groups. Thus, unemployed people tend to be concentrated in the lower end of the income distribution (Martínez, Ayala and Ruiz-Huerta, 2001). …”