Finance, Inequality and Unemployment: Empirical Evidences from Panel Data

• Main Authors: Ting-Cih Chen, 陳亭慈
• Other Authors: Chih-Chiang Hsu
• Format: Others
• Language: en_US
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/whc6we

博士 === 國立中央大學 === 經濟學系 === 106 === The financial system serves as an intermediary between the people who have savings and the firms and households who need financing to complete financial transactions and assist in economic activities. In recent decades, the consensus has been reached that financial intermediary development contributes to economic growth. However, there are intensive debates about whether everyone can enjoy the fruits of growth brought by financial development. Does financial development benefit the whole population equally, or does it disproportionately benefit the rich or the poor? Does financial sector development create or destroy jobs? Is financial architecture relevant for job creation or destruction? In this dissertation, we want to discuss these issues. In Chapter 2, we attempt to investigate the interaction between financial development and income inequality by testing the linear and nonlinear relationships in a panel data set of 40 countries over the period 1980-2014. We adopt the panel threshold regressions with fixed effects (Hansen, 1999) and common correlated effects (Pesaran, 2006) and find strong evidence of a two-regime split in our sample. The empirical results indicate that financial intermediary development deteriorates (ameliorates) the income distribution of those countries with relatively lower (higher) development. Chapter 3 empirically examines whether and how development and structure of a country’s financial sector affect its unemployment outcome. Using data on a large panel of advanced and developing countries spanning over the period 1991-2011, it finds that finance indeed plays a significant role in determining unemployment, conditional on credit and labor market imperfections. Specifically, financial development aggravates unemployment for countries at the latter stages of financial development and with heavily regulated labor markets. It is also found that a more market-oriented financial system improves unemployment for market-based countries with highly regulated labor markets.