The employment distribution and the creation of financial dependence

A fall in national income has varied consequences for the working population: some carry on working as normal, others become unemployed. Those excluded from work lose their main income source and must usually rely on public welfare, entering a financial dependence created endogenously as the economy adjusts. The current paper examines this induced financial dependence and its implications within a Post Keynesian model. A skewed employment distribution forces higher transfer payments than would occur if employment was distributed more evenly. The additional expenditures help to sustain profitability, so it is in the collective interest of employers and profit recipients to concentrate unemployment in a subset of the working population.