Unemployment and the Size Distribution of Income

The impact of changes in the level of unemployment on the U.K. size distribution of annual income is examined using cross-section data. Increased unemployment is shown to have a discernible regressive effect. However, reductions in shares were not highly concentrated at the very bottom of the distribution. Many individuals affected by unemployment during the year are in households/families, not at the bottom of the distribution, particularly because of the presence of other working members. Copyright 1986 by The Review of Economic Studies Limited.