Inequality and Employment in OECD Countries after the Financial Crisis

This article analyzes the impact of the 2008-2009 financial crisis on employment and inequality in OECD countries.

While the impact of the crisis has been quite heterogeneous, several OECD economies exhibit similar effects. In many countries employment declined, especially in construction and manufacturing industries, affecting mainly men and young workers.

In terms of income distribution, the crisis broke out after a period of increasing inequality. While recessions generally are retained to increase inequality, as they impact the most on already disadvantaged households, the 2008-2009 crisis, given its financial nature, had a greater impact on capital income, with a potentially equalizing effect; however, labour income is the main component of household income.

During the years of the crisis no clear trend in inequality is reported, thanks to the policies enacted to contrast the recession. However, after the crisis, many governments have introduced austerity measures to reduce the large public deficits accumulated, thus the political tools chosen will be crucial in determining the distributional effects.