IDEAS home Printed from https://ideas.repec.org/p/fgv/epgewp/560.html
   My bibliography  Save this paper

Towards a measure of income inequality freed from the volatility caused by variations in the rate of unemployment

Author

Listed:
  • Cysne, Rubens Penha

Abstract

By mixing together inequalities based on cyclical variables, such as unemployment, and on structural variables, such as education, usual measurements of income inequality add objects of a di§erent economic nature. Since jobs are not acquired or lost as fast as education or skills, this aggreagation leads to a loss of relavant economic information. Here I propose a di§erent procedure for the calculation of inequality. The procedure uses economic theory to construct an inequality measure of a long-run character, the calculation of which can be performed, though, with just one set of cross-sectional observations. Technically, the procedure is based on the uniqueness of the invariant distribution of wage o§ers in a job-search model. Workers should be pre-grouped by the distribution of wage o§ers they see, and only between-group inequalities should be considered. This construction incorporates the fact that the average wages of all workers in the same group tend to be equalized by the continuous turnover in the job market.

Suggested Citation

  • Cysne, Rubens Penha, 2004. "Towards a measure of income inequality freed from the volatility caused by variations in the rate of unemployment," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 560, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    • Handle: RePEc:fgv:epgewp:560
    as

    Download full text from publisher

    File URL: https://repositorio.fgv.br/bitstreams/0170ee82-c314-472a-8089-7ef5eb72c5ab/download
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rubens Penha Cysne, 2009. "On the Positive Correlation between Income Inequality and Unemployment," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 218-226, February.
    2. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-920, July.
    3. Shujie Yao, 1999. "On the decomposition of Gini coefficients by population class and income source: a spreadsheet approach and application," Applied Economics, Taylor & Francis Journals, vol. 31(10), pages 1249-1264.
    4. J. J. McCall, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(1), pages 113-126.
    5. Beach, Charles M, 1977. "Cyclical Sensitivity of Aggregate Income Inequality," The Review of Economics and Statistics, MIT Press, vol. 59(1), pages 56-66, February.
    6. Blinder, Alan S & Esaki, Howard Y, 1978. "Macroeconomic Activity and Income Distribution in the Postwar United States," The Review of Economics and Statistics, MIT Press, vol. 60(4), pages 604-609, November.
    7. repec:bla:econom:v:53:y:1986:i:212:p:421-45 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gustavo A. Marrero & Juan G. Rodriguez, 2012. "Macroeconomic determinants of inequality of opportunity and effort in the US: 1970-2009," Working Papers 249, ECINEQ, Society for the Study of Economic Inequality.
    2. Cysne, Rubens Penha & Turchick, David, 2012. "Equilibrium unemployment-inequality correlation," Journal of Macroeconomics, Elsevier, vol. 34(2), pages 454-469.
    3. Rubens Penha Cysne, 2009. "On the Positive Correlation between Income Inequality and Unemployment," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 218-226, February.
    4. Lídia Farré & Francis Vella, 2008. "Macroeconomic Conditions and the Distribution of Income in Spain," LABOUR, CEIS, vol. 22(3), pages 383-410, September.
    5. Stephen P. Jenkins & John Micklewright, 2007. "New Directions in the Analysis of Inequality and Poverty," Discussion Papers of DIW Berlin 700, DIW Berlin, German Institute for Economic Research.
    6. Marika Karanassou & Hector Sala, 2012. "Inequality and Employment Sensitivities to the Falling Labour Share," The Economic and Social Review, Economic and Social Studies, vol. 43(3), pages 343-376.
    7. Manoel BITTENCOURT, 2009. "Macroeconomic Performance And Inequality: Brazil, 1983–94," The Developing Economies, Institute of Developing Economies, vol. 47(1), pages 30-52, March.
    8. Markus Jäntti & Stephen Jenkins, 2010. "The impact of macroeconomic conditions on income inequality," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(2), pages 221-240, June.
    9. R. D. Plotnick & E. Smolensky & E. Evenhouse & S. Reilly, "undated". "The Twentieth Century Record of Inequality and Poverty in the United States," Institute for Research on Poverty Discussion Papers 1166-98, University of Wisconsin Institute for Research on Poverty.
    10. Oguzhan C. Dincer & Burak Gunalp, 2012. "Corruption And Income Inequality In The United States," Contemporary Economic Policy, Western Economic Association International, vol. 30(2), pages 283-292, April.
    11. Sophia Dimelis & Alexandra Livada, 1999. "Inequality and business cycles in the U.S. and European Union countries," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 5(3), pages 321-338, August.
    12. Salvatore Morelli, 2018. "Banking crises in the US: the response of top income shares in a historical perspective," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(2), pages 257-294, June.
    13. Rebecca M. Blank & Alan S. Blinder, 1985. "Macroeconomics, Income Distribution, and Poverty," NBER Working Papers 1567, National Bureau of Economic Research, Inc.
    14. W. Rayack, 1988. "The Impact of Recessions on Two-Parent Families: An Analysis of Earnings-Sensitivity by Family Income Class," Public Finance Review, , vol. 16(1), pages 101-128, January.
    15. St鰨ane Mussard & Patrick Richard, 2012. "Linking Yitzhaki's and Dagum's Gini decompositions," Applied Economics, Taylor & Francis Journals, vol. 44(23), pages 2997-3010, August.
    16. Berthold, Norbert & Brunner, Alexander & Zenzen, Jupp, 2010. "Makroökonomische Rahmenbedingungen und die Einkommensverteilung: Welchen Einfluss hat die Finanzkrise?," Discussion Paper Series 108, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    17. Marika Karanassou & Hector Sala, 2012. "Inequality and Employment Sensitivities to the Falling Labour Share," The Economic and Social Review, Economic and Social Studies, vol. 43(3), pages 343-376.
    18. repec:aia:aiaswp:wp38 is not listed on IDEAS
    19. Atal, Vidya & Bar, Talia & Gordon, Sidartha, 2016. "Project selection: Commitment and competition," Games and Economic Behavior, Elsevier, vol. 96(C), pages 30-48.
    20. Francesca Gastaldi & Paolo Liberati & Elena Pisano & Simone Tedeschi, 2014. "Progressivity-Improving VAT Reforms in Italy," Working papers 6, Società Italiana di Economia Pubblica.
    21. Chakravarty, Satya R. & Deutsch, Joseph & Silber, Jacques, 2008. "On the Watts Multidimensional Poverty Index and its Decomposition," World Development, Elsevier, vol. 36(6), pages 1067-1077, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fgv:epgewp:560. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Núcleo de Computação da FGV EPGE (email available below). General contact details of provider: https://edirc.repec.org/data/epgvfbr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.