Who let the Gini out? In search for sources of inequality, por Davide Furceri e Prakash Loungani. Mais um artigo acerca do importante tema da desigualdade crescente. Ler também Distributional effects of fiscal consolidation and the role of fiscal policy, do FMI.
Income inequality has been growing in many economies over the past two decades, and it is currently historically high. This column adds two new contributors to the popular explanations of increased inequality. Fiscal consolidations, especially those following the recent crisis, can increase inequality, mostly by affecting the long-term unemployment. A second source that leads to a persistent increase in inequality is capital account liberalisation. Therefore, the effects of these policies on inequality should be taken into account when deciding upon policy design.
There can be many channels through which fiscal consolidation raises inequality. For instance, cuts in social benefits and in public sector wages and employment, often associated with fiscal consolidation, may disproportionately affect lower-income groups. Another channel could be through the impact of fiscal consolidations on long-term unemployment, since long spells of unemployment are likely to be associated with significant earnings losses. Some evidence in favour of this comes from our finding that fiscal consolidations lead to an increase in long-term unemployment. The long-term unemployment rate is about 0.5 percentage points higher four years after an episode of consolidation; in contrast, the impact on short-term unemployment is very small.
In particular, the impact of capital account liberalisation on inequality holds even after the inclusion of myriad of other determinants of inequality such as output, openness to trade, changes in the size of government, changes in industrial structure, demographic changes, and regulations in product, labour and credit markets.
There are many channels through which opening up the capital account can lead to higher inequality. For example, an opening up allows financially constrained companies to borrow capital from abroad. If capital is more complementary to skilled workers, liberalisation increases the relative demand for such workers, leading to higher inequality in incomes. Indeed, there is evidence that the impact of liberalisation on wage inequality is greater in industries that are more dependent on external finance, and where the complementarity between capital and skilled labour is higher.