In this paper, we assess the impact of fiscal consolidation on income inequality. Using a panel of 18 industrialized countries from 1978 to 2009, we find that income inequality significantly rises during periods of fiscal consolidation. In addition, while fiscal policy that is driven by spending...

In this paper we use cross-state panel data to show that top income inequality is (at least partly) driven by innovation. We first establish a positive and significant correlation between various measures of innovativeness and top income inequality in cross-state panel regressions. Two distinct...

This paper examines the effects of introducing a non Walrasian labour market into the "New Neoclassical Synthesis'' framework. A dynamic stochastic general equilibrium model is formulated, solved, and calibrated in order to evaluate its ability to replicate the main features of the Euro area...

The recent empirical literature that uses Structural Vector Autoregressions (SVAR) has shown that productivity shocks identified using long--run restrictions lead to a persistent and significant decline in hours worked. This evidence calls into question standard RBC models in which a positive...

Hourly labour productivity levels in a number of European countries are thought to be very close to, or possibly even higher than the level 'observed' in the United States. At the same time, however, there are big differentials between hours worked and/or employment rates in these countries and...

In general, empirical studies having evaluated with firm individual data the effects of structural labour market reforms in European countries do not reach unambiguous conclusions. In particular, they find that reforms increasing incentives to lower the number of temporary labour contracts do...

Estimating returns to hours worked and the employment rate provides us with an original interpretation of changes in US productivity and other industrialized countries' catch-up with US productivity levels over recent decades

Using a unique French firm-level dataset, we study how international trade affects the wage bargaining process at the firm level. Using instrumental variables techniques, we find that exports shocks have a positive effect on the probability that a firm-level wage agreement is signed, while...

We study the effect of financial shocks in labor market dynamics. We build a model with two types of labor, two types of capital and both search and financial frictions. We find that financial shocks, modeled as exogenous disturbances to the borrowing constraint of firms, can generate realistic...

In this paper, I propose a new Keynesian DSGE model with labor market search and matching frictions which replicates the low volatility and the moderate procyclicality of the labor force participation rate, that are observed in the United States at business cycle frequency. That being so,it can...