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Title: Twisted Kuznets Curves

Citation Type: Miscellaneous

Publication Year: 2014

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Abstract: We investigate a new theoretical mechanism linking income levels and income distribution according to which both a high inequality and a low inequality equilibrium can be sustained, for any given level of aggregate income. This leads to a "twisted" Kuznets curve, an inverted U-shaped relationship between income (on the vertical axes) and inequality (on the horizontal axes) which resembles the original Kuznets curve, but with the axes swapped. Our results are generated by a dynamic signaling game of labor market competition where the signal is productive and wages feed back into endowments, which in turns a ffects the cost of providing the signal. We o er evidence for the U.S. on the existence of such twisted Kuznets curves and of the relevance of the signaling mechanism.

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Authors: Richiardi, Matteo; Bilancini, Ennio; Boncinelli, Leonardo

Publisher: University of Modena and Reggio Emilia

Data Collections: IPUMS CPS

Topics: Methodology and Data Collection, Other

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