Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/130398
Authors: 
von Ehrlich, Maximilian
Seidel, Tobias
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5776
Abstract: 
We build a heterogeneous-firms model with firm-specific wages and credit frictions to study the role of financial development for inequality in the global economy. If there are many small firms, better access to external funds reduces wage inequality and unemployment. In contrast, if there are many highproductive firms (those that export), financial development may have opposite effects - especially if trade costs are low. In sum, the implications of financial development for inequality depend on the size distribution of firms and on the costs of exporting. Trade liberalization, however, raises inequality unambiguously.
Subjects: 
financial development
credit constraints
international trade
inequality
JEL: 
F16
F65
Document Type: 
Working Paper

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