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

Jean Marie Baland, Debraj Ray

    Research output: Contribution to journalArticle


    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 compete for the use of the same scarce resources, unemployment is concieved 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.

    Original languageEnglish (US)
    Pages (from-to)69-92
    Number of pages24
    JournalJournal of Development Economics
    Issue number1
    StatePublished - Jan 1991


    ASJC Scopus subject areas

    • Development
    • Economics and Econometrics

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