Financial development and inequality in the global economy

von Ehrlich, Maximilian; Seidel, Tobias (February 2016). Financial development and inequality in the global economy (Discussion Papers 16-03). Bern: Department of Economics

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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 firms, better access to external funds reduces wage inequality and unemployment. In contrast, if there are many highproductive firms (those that export), 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:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

v. Ehrlich, Maximilian and Seidel, Tobias

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Discussion Papers

Publisher:

Department of Economics

Language:

English

Submitter:

Lars Tschannen

Date Deposited:

26 Feb 2021 15:01

Last Modified:

26 Feb 2021 15:01

JEL Classification:

F16, F65

BORIS DOI:

10.48350/145827

URI:

https://boris.unibe.ch/id/eprint/145827

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