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Why does asset inequality affect unemployment? A study of the demand composition problem

Baland, J.M.; Ray, D.

Journal of Development Economics 35(1): 69-92

1991

ISSN/ISBN: 0304-3878
DOI: 10.1016/0304-3878(91)90067-6
Document Number: 257647
This paper is devoted to a general equilibrium analysis of the relationship between the inequality in asset holdings and the aggregate levels of output and employment in a developing economy. Since luxuries and basic goods such as food compete for the use of the same scarce resources, unemployment is conceived as a mechanism whereby the market demand for basic goods can be limited to a sufficiently low level so that the high demand for luxuries can be met. The ambiguous effects of capital accumulation on employment are also examined.

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Why does asset inequality affect unemployment? A study of the demand composition problem

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