Inequality and business cycles in the U.S. and European Union countries

This paper derives the business cycle properties of some aggregate and disaggregate inequality indices for the U.S. and three European Union countries (United Kingdom, Italy, and Greece). The findings suggest that inequality indices move countercyclically with output in the U.S. and the United Kingdom, a procyclical behavior prevailed in Greece, and a mixed cycle influenced Italy. A common countercyclical pattern of inequality indices with inflation and unemployment characterizes the three large economies (U.S., United Kingdom, and Italy). Also, in most countries, the top income group seems to lose at the benefit of the rest during inflationary periods while, in all four countries, the poor will gain from inflation and suffer from unemployment.