How growing asset inequality affects developing economies

Hamid Beladi, Chi-Chur Chao and Daniel Hollas

Journal of Economics and Business, 2013, vol. 68, issue C, 43-51

Abstract: Using a dual structure depicting a developing economy, this paper shows that an increase in asset inequality can lead to wage inequality between skilled and unskilled labor. In addition, increasing asset inequality raises the luxury goods price and hence the unemployment ratio. These effects lower the social welfare of the economy. To mitigate the adverse effect on wage inequality by asset inequality, a policy option to increase the urban minimum wage rate can be considered. However, this wage policy worsens social welfare by generating higher urban unemployment in the economy.

Keywords: Asset inequality; Wage inequality; Social welfare (search for similar items in EconPapers)
JEL-codes: J31 O18 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148619513000271
Full text for ScienceDirect subscribers only

Related works:
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:eee:jebusi:v:68:y:2013:i:c:p:43-51

DOI: 10.1016/j.jeconbus.2013.03.004

Access Statistics for this article

Journal of Economics and Business is currently edited by Emanuele Bajo and Moritz Ritter

More articles in Journal of Economics and Business from Elsevier
Bibliographic data for series maintained by Catherine Liu ().