Financial Development and Inequality in the Global Economy

Maximilian von Ehrlich

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft - CRED

Abstract: We build a heterogeneous-firms model with firm-specific wages and credit frictions to study the role of financial development for inequality in the global economy. If there are many small firms, better access to external funds reduces wage inequality and unemployment. In contrast, if there are many highproductive firms (those that export), financial development may have opposite effects - especially if trade costs are low. In sum, the implications of financial development for inequality depend on the size distribution of firms and on the costs of exporting. Trade liberalization, however, raises inequality unambiguously.

Keywords: financial development; credit constraints; international trade; inequality (search for similar items in EconPapers)
JEL-codes: F16 F65 (search for similar items in EconPapers)
Date: 2016-02
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://repec.vwiit.ch/cred/CREDResearchPaper08.pdf (application/pdf)

Related works:
Journal Article: Financial Development and Inequality in the Global Economy (2019)
Working Paper: Financial Development and Inequality in the Global Economy (2016)
Working Paper: Financial development and inequality in the global economy (2016)
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:rdv:wpaper:credresearchpaper08

Access Statistics for this paper

More papers in Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft - CRED Contact information at EDIRC.
Bibliographic data for series maintained by Franz Koelliker ().