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Unemployment Shocks and Income Distribution: How did the Nordic Countries Fare during their Crises?
Author(s) -
Aaberge Rolf,
Wennemo Tom,
Bjorklund Anders,
Jantti Markus,
Pedersen Peder J.,
Smith Nina
Publication year - 2000
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00185
Subject(s) - economics , gini coefficient , unemployment , inequality , earnings , income distribution , economic inequality , distribution (mathematics) , demographic economics , income inequality metrics , labour economics , macroeconomics , mathematical analysis , mathematics , accounting
We study the inequality of disposable income in Denmark, Finland, Norway and Sweden during the late 1980s and early 1990s when unemployment rose dramatically in all four countries. A standard measure of inequality — the Gini coefficient – was surprisingly stable in all countries during this period. By decomposing the Gini into income components, we test hypotheses about the reasons for this stable income distribution. Our most straightforward hypothesis, that rising unemployment benefits counteracted the impact of more unequally distributed earnings, receives only limited support. More complex mechanisms seem to have been at work. JEL classification: D 30; D 31; J 60