Do Labor Market Policies and Growth Fundamentals Matter for Income Inequality in Oecd Countries? Some Empirical Evidence
January 1, 1997
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Summary
Income distribution may be related to fundamentals affecting economic growth and to labor market policies. Noting that inequality is affected by unemployment. This paper presents a model in which labor market policies affect unemployment which in turn affects inequality. The model also includes the effects of changes in per capita income on inequality through the accumulation of physical capital and technological know–how. When a resulting reduced–form relationship is estimated, its explanatory power is surprisingly high: on average, it explains about three quarters of the variation in inequality measures for the OECD countries, and Granger Causality tests confirm the model’s predictions.
Subject: Active labor market policies, Income distribution, Income inequality, Labor, Labor market policy, National accounts, Personal income
Keywords: Active labor market policies, Income distribution, income gain, Income inequality, income share, investment share, Labor market policy, labor market training, OECD employment outlook, per capita income, Personal income, physical capital, top-to-bottom income ratio, WP
Pages:
26
Volume:
1997
DOI:
Issue:
003
Series:
Working Paper No. 1997/003
Stock No:
WPIEA0031997
ISBN:
9781451841862
ISSN:
1018-5941
Notes
Also published in Staff Papers, Vol. 44, No. 3, September 1997.
