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Unemployment Shocks and Income Distribution How Did the Nordic Countries Fare During their Crises?

Author

Listed:
  • Rolf Aaberge
  • Anders Björklund
  • Markus Jäntti
  • Peder J. Pedersen
  • Nina Smith
  • Tom Wennemo

    (Statistics Norway)

Abstract

We analyse how inequality of disposable income evolved in Denmark, Finland, Norway and Sweden during the late 1980s and early 1990s when unemployment rose dramatically in all four countries. We find that a standard measure of inequality - the Gini coefficient - was surprisingly stable in all countries over this period. By decomposing the Gini coefficient into a number of income components, we can test hypotheses about the reasons for the stable income distribution. Our most straightforward hypothesis, that rising unemployment benefits have counteracted the impact of more unequally distributed earnings, gets only limited support. More complex mechanisms seems to have been at work in the Nordic countries.

Suggested Citation

  • Rolf Aaberge & Anders Björklund & Markus Jäntti & Peder J. Pedersen & Nina Smith & Tom Wennemo, 1997. "Unemployment Shocks and Income Distribution How Did the Nordic Countries Fare During their Crises?," Discussion Papers 201, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:201
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    References listed on IDEAS

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    1. Dex, Shirley, et al, 1995. "Cross-National Comparisons of the Labour Force Participation of Women Married to Unemployed Men," Oxford Economic Papers, Oxford University Press, vol. 47(4), pages 611-635, October.
    2. Rolf Aaberge & Iulie Aslaksen, 1996. "Decomposition of the Gini Coefficient by Income Components: Various Types of Applications and Interpretations," Discussion Papers 182, Statistics Norway, Research Department.
    3. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-156, February.
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    More about this item

    Keywords

    Unemployment; income inequality;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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