Work

The Distributional Effects of Economic Uncertainty*

Year: 2026

Type: article

Abstract: ABSTRACT We study the distributional implications of uncertainty shocks by developing a model that links macroeconomic aggregates to the US distribution of earnings and consumption. Our findings suggest that the fraction of low‐earning workers decreases initially, while the share of households reporting low consumption increases. At longer horizons, the fraction of low‐income workers increases, but the consumption distribution reverts to its preshock shape. While the first phase reduces income inequality and increases consumption inequality, in the second stage income inequality rises, and the effects on consumption inequality dissipate.

Source: International Economic Review

DOI: 10.1111/iere.70096

Authors: Florian Huber, Massimiliano Marcellino, Tommaso Tornese

Institutions: University of Salzburg, Bocconi University, Università Cattolica del Sacro Cuore

Language: English

Topic: Income, Poverty, and Inequality

Subfield: Sociology and Political Science

Field: Social Sciences

Domain: Social Sciences

SDGs: No poverty, Decent work and economic growth, Reduced inequalities

Open Access status: hybrid

Estimated APC paid: $3,570