Income inequality and the cost of recessions

Mostafa Shahee () and Glenn Jenkins ()
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Mostafa Shahee: Department of Policy Studies, Queen's University, Robert Sutherland Hall, Kingston, Ontario, K7L 3N6, Canada

Acta Oeconomica, 2021, vol. 71, issue 1, 85-97

Abstract: This study empirically examines the relationship between the severity of recessions experienced by countries and their income distributions. The analysis is carried out for 28 higher middle- and high-income countries between 1970 and 2013. The empirical evidence derived from the changes in the Gini-index suggests that a greater degree of income inequality increases the cumulative loss of GDP inflicted by recessions. The increased cost emerges from both a longer duration and a deeper amplitude for the contractionary phase of the business cycle.

Keywords: recession; income inequality; business cycle; income loss (search for similar items in EconPapers)
JEL-codes: E25 E32 (search for similar items in EconPapers)
Date: 2021
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Related works:
Working Paper: Income Inequality and the Cost of Recessions (2016)
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