Financial Development and Inequality in the Global Economy

von Ehrlich, Maximilian; Seidel, Tobias (February 2015). Financial Development and Inequality in the Global Economy (Submitted) (CESifo Working Paper Series 5776). Munich: CESifo

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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 high-productive 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
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:

von Ehrlich, Maximilian

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

CESifo Working Paper Series

Publisher:

CESifo

Language:

English

Submitter:

Simon Büchler

Date Deposited:

03 Aug 2017 13:42

Last Modified:

03 Aug 2017 13:42

Uncontrolled Keywords:

financial development, credit constraints, international trade, inequality

JEL Classification:

F160, F650

BORIS DOI:

10.7892/boris.95008

URI:

https://boris.unibe.ch/id/eprint/95008

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