Unemployment Shocks and Income Distribution: How Did the Nordic Countries Fare During Their Crises?

Posted: 29 Nov 2000

See all articles by Nina Smith

Nina Smith

Aarhus University - Department of Economics and Business Economics; IZA Institute of Labor Economics

Markus Jantti

Stockholm University

Rolf Aaberge

Statistics Norway; Institute for the Study of Labor (IZA); Deaprtment of Economics

Tom Wennemo

Statistics Norway

Anders Bjorklund

Stockholm University; IZA Institute of Labor Economics

Peder J. Pedersen

Department of Economics Aarhus University ; IZA Institute of Labor Economics

Abstract

We study the inequality of disposable income in Denmark, Finland, Norway and Sweden during the late 1980s and early 1990s when unemployment rose dramatically in all four countries. A standard measure of inequality - the Gini coefficient - was surprisingly stable in all countries during this period. By decomposing the Gini into income components, we test hypotheses about the reasons for this stable income distribution. Our most straightforward hypothesis, that rising unemployment benefits counteracted the impact of more unequally distributed earnings, receives only limited support. More complex mechanisms seem to have been at work.

JEL Classification: D30, D31, J60

Suggested Citation

Smith, Nina and Jantti, Markus and Aaberge, Rolf and Wennemo, Tom and Bjorklund, Anders and Pedersen, Peder J., Unemployment Shocks and Income Distribution: How Did the Nordic Countries Fare During Their Crises?. Available at SSRN: https://ssrn.com/abstract=234981

Nina Smith (Contact Author)

Aarhus University - Department of Economics and Business Economics ( email )

Universitetsparken
DK-8000 Aarhus C
Denmark
+45 8948 6413 (Phone)
+45 8615 5175 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Markus Jantti

Stockholm University ( email )

Swedish Institute for Social Research
Stockholm, SE-10691
Sweden
+468162645 (Phone)

HOME PAGE: http://www.abo.fi/~mjantti/

Rolf Aaberge

Statistics Norway ( email )

N-0033 Oslo
Norway

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Deaprtment of Economics ( email )

Norway

Tom Wennemo

Statistics Norway ( email )

N-0033 Oslo
Norway

Anders Bjorklund

Stockholm University ( email )

Swedish Institute for Social Research (SOFI)
S-106 91 Stockholm
Sweden
+46 8 163452 (Phone)
+46 8 154670 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Peder J. Pedersen

Department of Economics Aarhus University ( email )

DK-8000 Aarhus
Denmark
+45 8942 1581 (Phone)
+45 8613 6334 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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