Ups and Downs in Finance, Ups without Downs in Inequality

Godechot, Olivier; Neumann, Nils; Apascaritei, Paula; Boza, István; Hallsten, Martin; Henriksen, Lasse; Hermansen, Are; Hou, Feng; Jung, Jiwook; Kodama, Naomi; Křížková, Alena; Lippényi, Zoltán; Elvira, Marta M.; Melzer, Silvia Maja; Mun, Eunmi; Sabanci, Halil; Soener, Matthew; Thaning, Max

doi:10.1093/ser/mwac036

Item

ITEM ACTIONSEXPORT

Add to Basket

Local TagsRelease HistoryDetailsSummary

Released

Journal Article

Ups and Downs in Finance, Ups without Downs in Inequality

MPS-Authors

/persons/resource/persons104955

Godechot, Olivier
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo), MPI for the Study of Societies, Max Planck Society;
Assoziierte Wissenschaftlerinnen und Wissenschaftler, MPI for the Study of Societies, Max Planck Society;
Sciences Po, Paris, France;

External Resource

https://doi.org/10.1093/ser/mwac036
(Publisher version)

https://oup.silverchair-cdn.com/oup/backfile/Content_public/Journal/ser/21/3/10.1093_ser_mwac036/1/mwac036_supplementary_data.pdf?Expires=1693473322&Signature=jJr0-PiuZ4bLgKIt1ZGfBzcWrQsguMpC3ApjNltJFUgupvzGMik~fSbIC-P0ww39DRvhO7twNZSAd~ii-7l~nm-4FW7ovA00RXTBr9UxdrB54GJO-pOpN8wTgmvTKtav6IoGBRojDDnc6jS7rVLuQKn9viprPoTuFXeScpX6OvmF3t9yx5x6NGQhesyI-Kke3EnYG7APpztzNrStQIHa4~ZfqshFs4VQSXxovZgeqriWrtoZ5jBhDbYCRqWYowXTobmJRSzwgCM29kl22d4N34xh-86UziIGQNcBBnCoxWLHAUc~3-9zOtCkjstSqylQtlR~sERJzc-ro3Jx-m12Qw__&Key-Pair-Id=APKAIE5G5CRDK6RD3PGA
(Supplementary material)

Fulltext (restricted access)

There are currently no full texts shared for your IP range.

Fulltext (public)

SER_21_2023_Godechot.pdf
(Any fulltext), 979KB

Supplementary Material (public)

There is no public supplementary material available

Citation

Godechot, O., Neumann, N., Apascaritei, P., Boza, I., Hallsten, M., Henriksen, L., et al. (2023). Ups and Downs in Finance, Ups without Downs in Inequality. Socio-Economic Review, 21(3), 1601-1627. doi:10.1093/ser/mwac036.

Cite as: https://hdl.handle.net/21.11116/0000-000D-90F6-A

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.