Ups and downs in finance, ups without downs in inequality

Bibliographic Data

ID4237341
AuthorsOlivier Godechot (0000-0003-3199-8144, Centre de recherche sur les Inégalités Sociales), Nils Neumann (0000-0002-4244-2662, Centre de recherche sur les Inégalités Sociales), Paula Apascaritei (0000-0002-6640-2913, IESE Business School), István Boza (0000-0002-3068-6627, ELTE Centre for Economic and Regional Studies), Martin Hällsten (0000-0003-3660-9996, Stockholm University), L F Henriksen (0000-0003-4271-6528, Copenhagen Business School), A S Hermansen (0000-0001-8783-0362, University of Oslo), Feng Hou (0000-0002-4394-2167, Statistics Canada), J Jung (0000-0002-9784-1206, University of Illinois Urbana-Champaign), Naomi Kodama (0000-0002-5313-7006, Meiji Gakuin University), Alena Křížková (0000-0002-6616-3940, Czech Academy of Sciences, Institute of Sociology), Zoltán Lippényi (0000-0001-8751-5741, University of Groningen), Marta M Elvira (0000-0002-6006-2081, IESE Business School), Silvia Maja Melzer (0000-0002-6636-7097, Universitat Pompeu Fabra), E Mun (0000-0003-4317-9904, University of Illinois Urbana-Champaign), Halil Sabanci (0000-0002-3538-8637, IESE Business School), Matthew Soener (0000-0002-9261-9622, Institut d'Etudes Politiques de Paris), Max Thaning (0000-0002-1859-4703, Stockholm University)
Year2023
Volume21
Issue3
Pages1601-1627
Publication date2023-07-26
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueSocio-Economic Review (JOURNAL)
Journal identifiersISSN: 1475-1461 • E-ISSN: 1475-147X
DOI10.1093/ser/mwac036
OpenAlexW4225727761
LanguageEN
Citations received4
References cited30

The upswing in finance in recent decades has led to rising inequality, but do downswings in finance lead to a symmetric decline in inequality? We analyze the asymmetry of the effect of ups and downs in finance, and the effect of increased capital requirements and the bonus cap on national earnings inequality. We use administrative employer-employee-linked data from 1990 to 2019 for 12 countries and data from bank reports, from 2009 to 2017 in 13 European countries. We find a strong asymmetry in the effect of upswings and downswings in finance on earnings inequality, a weak, if any, mitigating effect of capital requirements on finance's contribution to inequality, and a restructuring but no absolute effect of the bonus cap on financiers' earnings. We suggest that while rising financiers' wages increase inequality in upswings, they are resilient in downswings and thus downswings do not contribute to a symmetric decline in inequality

Capital (architecture · Earnings · Economic inequality · Economics · Inequality · Labour economics · Monetary economics · Restructuring · Banking stability, regulation, efficiency · Housing Market and Economics · Housing, Finance, and Neoliberalism · Finance

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