Search results

We investigate the reasons why income inequality is so high in Spain in the EU context. We first show that the differential in inequality with Germany and other countries is driven by inequality among households who participate in the labor market. Then, we conduct an analysis of different household income aggregates. We also decompose the inter-country gap in inequality into characteristics and coefficients effects using regressions of the Recentered Influence Function for the Gini index. Our results show that the higher inequality observed in Spain is largely associated with lower employment rates, higher incidence of self-employment, lower attained education, as well as the recent increase in the immigration of economically active households. However, the prevalence of extended families in Spain contributes to reducing inequality by diversifying income sources, with retirement pensions playing an important role. Finally, by comparing the situations in 2008 and 2012, we separate the direct effects of the Great Recession on employment and unemployment benefits, from other more permanent factors (such as the weak redistributive effect of taxes and family or housing allowances, or the roles of education and the extended family).

This study examined the secular trends in socioeconomic inequality in obesity during the period 1971–1994 in the United States. We analyzed the national representative data collected from three waves of the National Health and Nutrition Examination Survey (NHANES) conducted between those years. The Concentration Index was calculated to measure the socioeconomic inequality in obesity across gender, age, and ethnic groups in each survey period. In general, socioeconomic inequality in obesity was reduced between the 1970s and 1990s in women and black men, although the trend was not statistically significant for black women and was stable in white men. Our results indicate that, first, the association between obesity and socioeconomic status (SES) weakened over time, and second, SES inequality was not an important contributor to the dramatic increase in the prevalence of obesity in the United States. Our findings suggest that other social and environmental factors, which have influenced changes in people’s lifestyle, might better explain the increasing overweight problem in the United States. Effective intervention efforts for the prevention and management of obesity should target all SES groups from a population perspective.

Purpose – Ascertaining the extent to which the generalized decline in union density, as well as the erosion in centralized bargaining structures and developments in other labor institutions, have contributed to rising within-country inequality.

Methodology – Econometric analysis of a newly developed dataset combining information on industrial relations and labor law, various dimensions of globalization, and controls for demand and supply of skilled labor for 51 Advanced, Central and Eastern European, Latin American, and Asian countries from the late 1980s to the early 2000s, followed by an analysis of 16 advanced countries over a longer time frame (from the late 1970s to the early 2000s).

Findings – In contrast to previous research, which finds labor institutions to be important determinants of more egalitarian wage or income distributions, the chapter finds that trade unionism and collective bargaining are no longer significantly associated with within-country inequality, except in the Central and Eastern European countries. These findings are interpreted as the result of trade unionism operating under more stringent structural constraints than in the past, partly as a result of globalization trends. In addition, despite much talk about welfare state crisis, welfare states, historically the result of labor's power and mobilization capacity, still play an important redistributive role, at least in advanced countries.

Practical implications – Union attempts at equalizing incomes by compressing market earnings seem ineffective and impractical in the current day and age. Unions should seek to increase the workers’ skill levels and promote an egalitarian transformation of the workplace. This type of “supply-side” egalitarianism is not a new strategy for unions, but is very much embedded in the unions’ DNA.

This paper produces a comprehensive assessment of income redistribution to the working-age population, covering OECD countries over the last two decades. Redistribution is quantified as the relative reduction in market income inequality achieved by personal income taxes (PIT), employees’ social security contributions, and cash transfers, based on household-level micro-data. A detailed decomposition analysis uncovers the respective roles of size, tax progressivity, and transfer targeting for overall redistribution, the respective role of various categories of transfers for transfer redistribution; as well as redistribution for various income groups. The paper shows a widespread decline in redistribution across the OECD, both on average and in the majority of countries for which data going back to the mid-1990s are available. This was primarily associated with a decline in cash transfer redistribution while PIT played a less important and more heterogeneous role across countries. In turn, the decline in the redistributive effect of cash transfers reflected a decline in their size and in particular by less redistributive insurance transfers. In some countries, this was mitigated by more redistributive assistance transfers but the resulting increase in the targeting of total transfers was not sufficient to prevent transfer redistribution from declining.

The secondary analysis of the European Union Statistics on Income and Living Conditions (EU-SILC) is used to examine inequality in the United Kingdom compared with other European Union (EU) countries and to analyse how inequality has changed over the period from the start of the great financial crisis in 2008–2015. The analysis compares inequality in market income, gross income and disposable incomes, and measured inequality using the Gini coefficient, 80/20 and 90/10 ratios. It includes an analysis of the impact of cash benefits and direct taxes on market income and how the composition of households in different parts of the income distribution has changed over time. In addition, inequality within the EU is explored. The chapter concludes with a discussion of what contribution the EU itself through its own institutions and policies plays in mitigating market inequalities. We find that the distribution of market income in the United Kingdom is comparatively unequal, but the UK’s relative position on disposable income is greatly improved, due to an effective system of direct taxes and transfers. The conclusions remain broadly similar for all the inequality indices that are considered. There is evidence that households with children have moved down the distribution between 2008 and 2014 and aged households have moved up the distribution in most EU countries including the United Kingdom. The chapter concludes that EU policies have relatively little impact on inequality and that inequalities can really only be tackled using national redistributive policies.

The minimum wage has been regarded as an important element of public policy for reducing poverty and inequality. Increasing the minimum wage is supposed to raise earnings for millions of low-wage workers and therefore lower earnings inequality. However, there is no consensus in the existing literature from industrialized countries regarding whether increasing the minimum wage has helped lower earnings inequality. China has recently exhibited rapid economic growth and widening earnings inequality. Since China promulgated new minimum wage regulations in 2004, the magnitude and frequency of changes in the minimum wage have been substantial, both over time and across jurisdictions. The growing importance of research on the relationship between the minimum wage and earnings inequality and its controversial nature have sparked heated debate in China, highlighting the importance of rigorous research to inform evidence-based policy making. We investigate the contribution of the minimum wage to the well-documented rise in earnings inequality in China from 2004 to 2009 by using city-level minimum wage panel data and a representative Chinese household survey, and we find that increasing the minimum wage reduces inequality – by decreasing the earnings gap between the median and the bottom decile – over the analysis period.

In large parts of the world, income inequality has been rising in recent decades. Other regions have experienced declining trends in income inequality. This raises the question of which mechanisms underlie contrasting observed trends in income inequality around the globe. To address this research question in an empirical analysis at the aggregate level, we examine a global sample of 73 countries between 1981 and 2010, studying a broad set of drivers to investigate their interaction and influence on income inequality. Within this broad approach, we are interested in the heterogeneity of income inequality determinants across world regions and along the income distribution. Our findings indicate the existence of a small set of systematic drivers across the global sample of countries. Declining labour income shares and increasing imports from high-income countries significantly contribute to increasing income inequality, while taxation and imports from low-income countries exert countervailing effects. Our study reveals the region-specific impacts of technological change, financial globalisation, domestic financial deepening and public social spending. Most importantly, we do not find systematic evidence of education’s equalising effect across high- and low-income countries. Our results are largely robust to changing the underlying sources of income Ginis, but looking at different segments of income distribution reveals heterogeneous effects.

A transfer from a richer individual to a poorer one seems to be the most intuitive and straightforward way of reducing income inequality in a society. However, can such a transfer reduce the welfare of the society? We show that a rich-to-poor transfer can induce a response in the individuals’ behaviors which actually exacerbates, rather than reduces, income inequality as measured by the Gini index. We use this result as an input in assessing the social welfare consequence of the transfer. Measuring social welfare by Sen’s social welfare function, we show that the transfer reduces social welfare. These two results are possible even for individuals whose utility functions are relatively simple (namely, at most quadratic in all terms) and incorporate a distaste for low relative income. We first present the two results for a population of two individuals. We subsequently provide several generalizations. We show that our argument holds for a population of any size, and that the choice of utility functions which trigger this response is not singular – the results obtain for an open set of the space of admissible utility functions. In addition, we show that a rich-to-poor transfer can exacerbate inequality when we employ Lorenz-domination, and that it can decrease social welfare when we draw on any increasing, Schur-concave welfare function.

We investigate the relationship between the notion of progressive taxation and inequality reduction under a general version of the concept of inequality equivalence. We consider a two-parameter formalization of the concept of inequality equivalence that both includes, as special cases, the intermediate inequality equivalence and the path-independent/unit-consistent inequality equivalence. Both criteria could range from relative to absolute inequality views as the parameters in the formulation change. For the path-independent/unit-consistent inequality equivalence the condition of nondecreasing average tax rate is necessary and sufficient to guarantee the inequality-reducing effect of taxation for all the inequality views in between the relative and the absolute.