Wealth Inequality and the Political Economy of Financial and Labor Markets

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dc.description.abstract We examine the role of wealth inequality in the political process that determines financial and labor market regulations. We study a two factor model with credit restrictions, where political groups: labor, SMEs and large firms arise endogenously and have opposing interests with respect to structural variables such as employment protection and creditor protection. We embed these groups in a political model and obtain the prediction that in poor countries an increase in wealth inequality will lead to lower employment protection and worse creditor protection as result of the political platforms of the parties. The negative effect of inequality is smaller for wealthier countries. We perform a preliminary empirical test across countries, obtaining good agreement with predictions of the model. en
dc.title Wealth Inequality and the Political Economy of Financial and Labor Markets en
dc.contributor.author Fischer, Ronald
dc.contributor.author Huerta, Diego
dc.date.accessioned 2018-02-13T20:30:16Z
dc.date.available 2018-02-13T20:30:16Z
dc.date.issued 2018-02-13
dc.identifier.uri http://lacer.lacea.org/handle/123456789/64541
lacea.language.supported en
dc.description Working paper
dc.language.iso en
dc.subject Wealth Distribution
dc.subject Conflicts of Interest
dc.type Working Paper

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