@article{0fddaab751704ff8a305b95e9d5ee82f,
title = "Ups and downs in finance, ups without downs in inequality",
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{\textquoteright}s contribution to inequality, and a restructuring but no absolute effect of the bonus cap on financiers{\textquoteright} earnings. We suggest that while rising financiers{\textquoteright} wages increase inequality in upswings, they are resilient in downswings and thus downswings do not contribute to a symmetric decline in inequality.",
keywords = "D31 personal income, G38 government policy and regulation, N2 financial markets and institutions, finance, financial crisis, inequality, regulation, wealth and their distributions",
author = "Olivier Godechot and Nils Neumann and Paula Apascaritei and Istv{\'a}n Boza and Martin Hallsten and Lasse Henriksen and Are Hermansen and Feng Hou and Jiwook Jung and Naomi Kodama and Alena K{\v r}{\'i}{\v z}kov{\'a} and Zolt{\'a}n Lipp{\'e}nyi and Elvira, {Marta M} and Melzer, {Silvia Maja} and Eunmi Mun and Halil Sabanci and Matthew Soener and Max Thaning",
note = "The research and writing of this paper benefited from the monetary support of the following institutions: National Agency for Research (grant ANR-17-CE41-0009-01), Alexander von Humboldt-Foundation (grant AR8227), Independent Research Fund Denmark (grant 5052-00143b), Swedish Research Council for Health, Working Life and Welfare supports (grant 2015-00807), European Social Fund and state budget of the Czech Republic (grant CZ.03.1.51/0.0/0.0/15_009/0003702), Rozvoj V{\'y}zkumn{\'e} Organizace (RVO:68378025), NPO “Systemic Risk Institute” LX22NPO5101, Chair in Family-Owned Business at IESE, Research Council of Norway (grant 287016), the Spanish Ministry of Science and Innovation (grant nr. PID2020-118807RB-I00/AEI/10.13039/501100011033), the Fritz Henkel Foundation (Endowed PhD Scholarship), Swedish Forte (grant nr. 2015-00807), from the European Research Council ERC Advanced Grant (grant nr. 340045), and the US National Science Foundation (grant SES-1528294).",
year = "2023",
month = jul,
day = "1",
doi = "10.1093/ser/mwac036",
language = "English (US)",
volume = "21",
pages = "1601--1627",
journal = "Socio-Economic Review",
issn = "1475-1461",
publisher = "Oxford University Press",
number = "3",
}