Ups and downs in finance, ups without downs in inequality

Olivier Godechot, Nils Neumann (), Paula Apascaritei, István Boza, Martin Hallsten, Lasse Henriksen, Are Hermansen, Feng Hou, Jiwook Jung, Naomi Kodama, Alena Křížková, Zoltán Lippényi, Elvira Marta, Silvia Maja Melzer, Eunmi Mun, Halil Sabanci, Matthew Soener () and Max Thaning
Additional contact information
Nils Neumann: MaxPo - Max Planck Sciences Po Center on Coping with Instability in Market Societies - Max Planck Institute for the Study of Societies - Max-Planck-Gesellschaft - Sciences Po - Sciences Po, OSC - Observatoire sociologique du changement (Sciences Po, CNRS) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique
Paula Apascaritei: IESE Business school - University of Navarra
Martin Hallsten: Stockholm University
Lasse Henriksen: CBS - Copenhagen Business School [Copenhagen]
Are Hermansen: UiO - University of Oslo, Swedish Institute for Social Research - Stockholm University
Feng Hou: Statistics Canada - Statistics Canada
Jiwook Jung: UIUC - University of Illinois at Urbana-Champaign [Urbana] - University of Illinois System
Naomi Kodama: Meiji Gakuin University
Alena Křížková: Institute of sociology (Sociologický ústav) - CAS - Czech Academy of Sciences [Prague]
Zoltán Lippényi: University of Groningen [Groningen]
Elvira Marta: UPNA - Universidad Pública de Navarra [Espagne] = Public University of Navarra
Eunmi Mun: UIUC - University of Illinois at Urbana-Champaign [Urbana] - University of Illinois System
Halil Sabanci: IESE Business school - University of Navarra
Matthew Soener: Sciences Po - Sciences Po
Max Thaning: Stockholm University

SciencePo Working papers Main from HAL

Abstract: The upswing in finance in recent decades has led to rising inequality, but do downswings in finance lead to a symmetric decline in inequality? We analyze the asymmetry of the effect of ups and downs in finance, and the effect of increased capital requirements and the bonus cap on national earnings inequality. We use administrative employer–employee-linked data from 1990 to 2019 for 12 countries and data from bank reports, from 2009 to 2017 in 13 European countries. We find a strong asymmetry in the effect of upswings and downswings in finance on earnings inequality, a weak, if any, mitigating effect of capital requirements on finance's contribution to inequality, and a restructuring but no absolute effect of the bonus cap on financiers' earnings. We suggest that while rising financiers' wages increase inequality in upswings, they are resilient in downswings and thus downswings do not contribute to a symmetric decline in inequality.

Keywords: inequality; finance; financial crisis; regulation (search for similar items in EconPapers)
Date: 2023-07
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03857878
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Socio-Economic Review, 2023, 21 (3), pp.1601-1627. ⟨10.1093/ser/mwac036⟩

Downloads: (external link)
https://sciencespo.hal.science/hal-03857878/document (application/pdf)

Related works:
Working Paper: Ups and downs in finance, ups without downs in inequality (2023)
Working Paper: Ups and Downs in Finance, Ups without Downs in Inequality (2021)
Working Paper: Ups and Downs in Finance, Ups without Downs in Inequality (2021)
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:hal:spmain:hal-03857878

DOI: 10.1093/ser/mwac036

Access Statistics for this paper

More papers in SciencePo Working papers Main from HAL
Bibliographic data for series maintained by Contact - Sciences Po Departement of Economics ().