Search Results
Showing results 1 to 1 of approximately 1.
(refine search)
Report
Income Inequality and Job Creation
We propose a novel channel through which rising income inequality affects job creation and macroeconomic outcomes. High-income households save relatively more in stocks and bonds but less in bank deposits. A rising top income share thereby increases the relative financing costs for bank-dependent firms, which in turn create fewer jobs. Exploiting variation across U.S. states and an IV strategy, we provide evidence for the channel. Calibrating a general equilibrium model to our cross-regional estimates, we show that rising inequality increases the employment share of large firms, reduces the ...