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  Ups and Downs in Finance, Ups without Downs in Inequality

Godechot, O., Neumann, N., Apascaritei, P., Boza, I., Hällsten, M., Henriksen, L., et al. (2021). Ups and Downs in Finance, Ups without Downs in Inequality. MaxPo Discussion Paper, 21/2.

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Godechot, Olivier1, 2, 3, Author           
Neumann, Nils3, Author
Apascaritei, Paula4, Author
Boza, István5, Author
Hällsten, Martin6, Author
Henriksen, Lasse7, Author
Hermansen, Are8, Author
Hou, Feng9, Author
Jung, Jiwook10, Author
Kodama, Naomi11, Author
Křížková, Alena12, Author
Lippényi, Zoltán13, Author
Marta, Elvira14, Author
Melzer, Silvia Maja15, Author
Mun, Eunmi10, Author
Sabanci, Halil14, Author
Soener, Matthew3, Author
Thaning, Max6, Author
1Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo), MPI for the Study of Societies, Max Planck Society, ou_1631137              
2Assoziierte Wissenschaftlerinnen und Wissenschaftler, MPI for the Study of Societies, Max Planck Society, ou_2074316              
3Sciences Po, Paris, France, ou_persistent22              
4Universidad Carlos III de Madrid, Spain, ou_persistent22              
5Central European University, Budapest, Hungary, ou_persistent22              
6Stockholm University, Sweden, ou_persistent22              
7Copenhagen Business School, Denmark, ou_persistent22              
8University of Oslo, Norway, ou_persistent22              
9Statistics Canada, Ottawa, Ontario, Canada, ou_persistent22              
10University of Illinois at Urbana Champaign, USA, ou_persistent22              
11Institute of Economic Research, Hitotsubashi University, Tokyo, Japan, ou_persistent22              
12Institute of Sociology, Czech Academy of Sciences, Praha, Czechia, ou_persistent22              
13University of Groningen, The Netherlands, ou_persistent22              
14IESE Business School, University of Navarra, Spain, ou_persistent22              
15Universitat Pompeu Fabra, Barcelona, Spain, ou_persistent22              


Free keywords: inequality, finance, financial crisis, regulation; inégalité, finance, crise financière, régulation
 Abstract: The upswing in finance over the past several decades has led to rising inequality, but
do downswings in finance lead to a symmetric decline in inequality? In this paper, we
analyze the asymmetry of the effect of ups and downs in financial markets, as well as
the effect of increased capital requirements and the bonus cap on national earnings in-
equality. We use administrative employer–employee linked data on earnings from 1990
to 2017 for twelve countries. Additionally, we use data on earnings from bank reports,
from 2009 to 2017 in thirteen European countries. We find a strong asymmetry in the
effects of financial ups and downs on earnings inequality, a mitigating effect of rising
capital requirements on the contribution of finance to inequality, and a restructuring ef-
fect of the bonus cap for the earnings of financiers, while neither policy affects absolute levels of earnings inequality.
 Abstract: La hausse de la finance au cours des dernières décennies a entraîné une hausse des
inégalités, mais les ralentissements de la finance entraînent-ils une baisse symétrique
des inégalités? Dans cet article, nous examinons l'asymétrie de l'effet des hausses et
des ralentissements des marchés financiers, ainsi que l'effet de l'augmentation des exi-
gences en matière de capital et du plafonnement des primes sur l'inégalité des salaires
nationaux. Nous utilisons des données administratives couplées employeur-employé
sur les salaires de 1990 à 2017 pour douze pays. De plus, nous employons des données
sur les salaires provenant des rapports bancaires, de 2009 à 2017, dans 13 pays euro-
péens. Nous constatons une forte asymétrie dans les effets des hausses et des ralentis-
sements financières sur l'inégalité des salaires, un effet de mitigation de l'augmentation
des exigences de capitalisation sur la contribution de la finance à l'inégalité, et un effet
de restructuration du plafonnement des primes pour les salaires des financiers, alors qu'aucune des deux mesures n'affecte les niveaux absolus d'inégalité des salaires.


Language(s): eng - English
 Dates: 2021-022021
 Publication Status: Published in print
 Pages: iv, 34
 Publishing info: Paris : MaxPo
 Table of Contents: iv MaxPo Discussion Paper 21/2
1 Introduction
2 Data
Administrative employer–employee linked data
World Bank GFDD database
European bank reports
3 The contribution of financiers’ earnings to inequality and its asymmetry
in upswings and downswings
Less finance, less inequality? The asymmetry of the redistribution of
earnings through financialization
4 Finance, regulation, and inequality
Capital requirements and inequality
The bonus cap
5 Conclusion
A1 Data description
A2 Supplementary tables and figures
 Rev. Type: Internal
 Identifiers: -
 Degree: -



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Title: MaxPo Discussion Paper
Source Genre: Series
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo), MPI for the Study of Societies, Max Planck Society, Editor              
Publ. Info: -
Pages: - Volume / Issue: 21/2 Sequence Number: - Start / End Page: - Identifier: ISSN: 2196-6508
ISSN: 2197-3075