Financial Development and Inequality in the Global Economy

v. Ehrlich, Maximilian; Seidel, Tobias (2019). Financial Development and Inequality in the Global Economy (In Press). The Scandinavian journal of economics Wiley 10.1111/sjoe.12312

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We build a heterogeneous‐firms model with firm‐specific wages and credit frictions to study the role of financial development for inequality in the global economy. If there are many small (non‐exporting) firms, better access to external funds reduces wage and profit inequality as well as unemployment. In contrast, if there are many large (exporting) firms, financial development may have opposite effects – especially if trade costs are low. In sum, the implications of financial development for inequality depend on the size distribution of firms and on the costs of exporting. Trade liberalization, however, raises inequality unambiguously.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Economic Policy and Regional Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Public Economics
11 Centers of Competence > Center for Regional Economic Development (CRED)

UniBE Contributor:

v. Ehrlich, Maximilian

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

1467-9442

Publisher:

Wiley

Language:

English

Submitter:

Melanie Moser

Date Deposited:

18 Jun 2019 16:05

Last Modified:

18 Jun 2019 16:05

Publisher DOI:

10.1111/sjoe.12312

BORIS DOI:

10.7892/boris.127641

URI:

https://boris.unibe.ch/id/eprint/127641

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