Financial deepening and income distribution inequality in the euro area

Donatella Baiardi and Claudio Morana
Additional contact information
Donatella Baiardi: Università di Milano Bicocca

No 153, CeRP Working Papers from Center for Research on Pensions and Welfare Policies, Turin (Italy)

Abstract: The paper introduces a new specification of the Kuznets curve, where turning point per capita income is conditioned to the level of financial development. Within the proposed framework, it then provides new evidence on real income convergence for the euro area (EA) since the mid-1980s, with a special focus on the subprime and sovereign debt financial crises. We find strong empirical evidence in favor of an EA-wide steady-state financial Kuznets curve and of ongoing convergence across EA members toward a common per capita income turning point level. By means of a counterfactual analysis, we then detect a worsening in income inequality for all the EA countries during the financial crises, and not only for the peripheral countries, which were most strongly hit. From a policy perspective, our findings highlight the role of financial stability in fostering not only economic growth, but also to achieve a more even distribution of income.

Pages: 33 pages
Date: 2015-12
New Economics Papers: this item is included in nep-eec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.cerp.carloalberto.org/wp-content/uploads/2015/12/WP_153.pdf (application/pdf)

Related works:
Working Paper: Financial deepening and income distribution inequality in the euro area (2015)
Working Paper: Financial Deepening And Income Distribution Inequality In The Euro Area (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:crp:wpaper:153

Access Statistics for this paper

More papers in CeRP Working Papers from Center for Research on Pensions and Welfare Policies, Turin (Italy) Contact information at EDIRC.
Bibliographic data for series maintained by Silvia Maero ().