Discussion Paper

No. 2019-44 | July 19, 2019
Job duration and inequality


As suggested by recent empirical evidence, one of the causes behind the widespread rise of inequality experienced by OECD countries in the last few decades may have been the increased flexibility of labor markets. The authors explore this hypothesis through the analysis of a stock-flow consistent agent-based macroeconomic model able to reproduce with good statistical precision several empirical regularities. To this scope they employ three different sensitivity analysis techniques, which indicate that increasing job contract duration (i.e. decreasing flexibility) has the effect of reducing income and wealth inequality. However, the authors also find that this effect is diminished by tight monetary policy and low credit supply. This result suggests that the final outcome of structural reforms aimed at changing labor flexibility can depend on the macroeconomic environment in which these are implemented.

JEL Classification:

C15, C63, D31, E50, J01, J41


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Cite As

Siyan Chen and Saul Desiderio (2019). Job duration and inequality. Economics Discussion Papers, No 2019-44, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2019-44

Comments and Questions

Anonymous - Referee Report 1
August 15, 2019 - 08:10

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Siyan Chen and Saul Desiderio - Reply to Referee Report 1
September 02, 2019 - 11:47

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Anonymous - Referee Report 2
October 10, 2019 - 12:11

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Siyan Chen and Saul Desiderio - Reply to Referee Report 2
October 21, 2019 - 10:11

see attached file