"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 cost for bank-dependent firms, which in turn create fewer jobs."
I think another mechanism by which economic inequality affects job growth is just that high income and wealthy people are more likely to invest in big companies, which do not create jobs as much as small companies. Low income people are more likely to invest their lives in creating a small family company. It also makes sense to me that public policy should favor small companies and networks between them.
To be clear, I don't know of any research on this.
There's efficiency and then there's being a nice place to live.
For instance, in my country it's illegal to own farmland unless you're a farmer (not an agricorp) who farms nearly full-time (or at least whose part-time work is related to the farm: value-added products, etc. and not a town job).
It's probably less efficient than having Archer Daniels Midland, etc. owning all the farmland, but I think the result, a countryside full of family farms, makes for a much better rural environment.
Excerpt from the abstract:
I think another mechanism by which economic inequality affects job growth is just that high income and wealthy people are more likely to invest in big companies, which do not create jobs as much as small companies. Low income people are more likely to invest their lives in creating a small family company. It also makes sense to me that public policy should favor small companies and networks between them.To be clear, I don't know of any research on this.
There's efficiency and then there's being a nice place to live.
For instance, in my country it's illegal to own farmland unless you're a farmer (not an agricorp) who farms nearly full-time (or at least whose part-time work is related to the farm: value-added products, etc. and not a town job).
It's probably less efficient than having Archer Daniels Midland, etc. owning all the farmland, but I think the result, a countryside full of family farms, makes for a much better rural environment.
The abstract is interesting. I don't understand economics enough to approve or disapprove, but it looks to me like all the right elements are there.