The study of the upper tail of the income and wealth distributions is important to the understanding of economic inequality. By means of the ‘isograph’, a new tool to…
The study of the upper tail of the income and wealth distributions is important to the understanding of economic inequality. By means of the ‘isograph’, a new tool to describe income or wealth distributions, the authors compare wealth and income and wealth-to-income ratios in 16 European countries and the United States using data for years 2013/2014 from the Eurozone Household Finance and Consumption Survey and the US Survey on Consumer Finance. Focussing on the top half of the distribution, the authors find that for households in the top income quintile, wealth-to-income ratios generally increase rapidly with income; the association between high wealth and high incomes is highest among the highest percentiles. There is generally a positive relationship between median wealth in the country and the wealth of the top 1%. However, the United States is an outlier where the median wealth is relatively low but the wealth of the top 1% is extremely high.
I find that median wealth plummeted over the years 2007–2010, and by 2010 was at its lowest level since 1969. The inequality of net worth, after almost two decades of…
I find that median wealth plummeted over the years 2007–2010, and by 2010 was at its lowest level since 1969. The inequality of net worth, after almost two decades of little movement, was up sharply from 2007 to 2010. Relative indebtedness continued to expand from 2007 to 2010, particularly for the middle class, though the proximate causes were declining net worth and income rather than an increase in absolute indebtedness. In fact, the average debt of the middle class actually fell in real terms by 25 percent. The sharp fall in median wealth and the rise in inequality in the late 2000s are traceable to the high leverage of middle-class families in 2007 and the high share of homes in their portfolio. The racial and ethnic disparity in wealth holdings, after remaining more or less stable from 1983 to 2007, widened considerably between 2007 and 2010. Hispanics, in particular, got hammered by the Great Recession in terms of net worth and net equity in their homes. Households under age 45 also got pummeled by the Great Recession, as their relative and absolute wealth declined sharply from 2007 to 2010.
This chapter and case study examine how and which structured elements of an employee-owned business contribute to building the economic security and asset wealth of the…
This chapter and case study examine how and which structured elements of an employee-owned business contribute to building the economic security and asset wealth of the lowest-wage and skilled employees of the firm. It paves the way for greater understanding about how intentionally structured workplaces can address wealth inequality and economic security through income and non-income opportunity systems.
The study draws upon qualitative interviews with four members of management, two plant managers, and 12 low-income employee-owners. Company documents and confidential employee data were provided for direct research analysis. Interviews took place at company locations, and covered employees from all shifts.
Employee ownership structures provide an important tool for advancing policy support and management practices to rebuild the wealth building benefits of work for low-income workers.
To ensure confidentiality, the study is anonymized and does not directly draw on the worker-owner interviews. This limits the opportunity to demonstrate the effect of structure on workforce; nonetheless, the empirical data tell an important story.
Expanding wealth inequality and economic precarity among low- and moderate-income workers has raised broad debates about how shifts in the structure of work, through new business, capital, and ownership structures, may be contributing to these social problems.
The employee benefits of employee ownership are not fully studied. This case contributes to understanding how employee ownership may reduce gender and racial wealth gaps, build family well-being, and become a model for structuring opportunity for those traditionally left out of the economic mainstream.
This book is a policy proposal aimed at the democratic left. It is concerned with gradual but radical reform of the socio‐economic system. An integrated policy of…
This book is a policy proposal aimed at the democratic left. It is concerned with gradual but radical reform of the socio‐economic system. An integrated policy of industrial and economic democracy, which centres around the establishment of a new sector of employee‐controlled enterprises, is presented. The proposal would retain the mix‐ed economy, but transform it into a much better “mixture”, with increased employee‐power in all sectors. While there is much of enduring value in our liberal western way of life, gross inequalities of wealth and power persist in our society.
In the wake of the Stiglitz Commission, we assess German economic well-being by considering income, wealth and consumption. A decomposition approach is used to test for…
In the wake of the Stiglitz Commission, we assess German economic well-being by considering income, wealth and consumption. A decomposition approach is used to test for corresponding inequality differences of these well-being dimensions. Total inequality is decomposed into within- and between-group inequality (via a normalised coefficient of variation). The decompositions are categorised into those that refer to socio-demographic characteristics (place of residence, age, household type) and those belonging to different well-being (sub-)categories (potential and net income, expenditure and wealth categories). The empirical analyses are performed for Germany using the 2008 German Sample Survey of Income and Expenditure. By decomposing German well-being inequality in great detail, we shed light on its dimensions. Our analyses illustrate that it is necessary to consider all well-being dimensions to make statements about the material well-being of private households or individuals.
This paper considers a parametric model for the joint distribution of income and wealth. The model is used to analyze income and wealth inequality in five OECD countries…
This paper considers a parametric model for the joint distribution of income and wealth. The model is used to analyze income and wealth inequality in five OECD countries using comparable household-level survey data. We focus on the dependence parameter between the two variables and study whether accounting for wealth and income jointly reveals a different pattern of social inequality than the traditional “income only” approach. We find that cross-country variations in the dependence parameter effectively account only for a small fraction of cross-country differences in a bivariate measure of inequality. The index appears primarily driven by differences in inequality in the wealth distribution.
Based on empirical patterns of annual earnings and saving from new micro-data covering a large sample of American workers around a hundred years ago, we develop a model…
Based on empirical patterns of annual earnings and saving from new micro-data covering a large sample of American workers around a hundred years ago, we develop a model for simulating the cross-section distribution of wealth at the turn of the twentieth century. Our methodology allows for a direct comparison with the wealth distribution from a sample of families in a comparable part of the contemporary income distribution. Our primary finding is that patterns of wealth accumulation among American workers at the turn of the century bear a striking resemblance to contemporary profiles.
The 2007–2009 financial crisis initially appeared to have destroyed a huge amount of wealth in the United States. Housing prices dropped about 21% across the country and…
The 2007–2009 financial crisis initially appeared to have destroyed a huge amount of wealth in the United States. Housing prices dropped about 21% across the country and as much as 50% in some places, and the stock market dropped by nearly 50% as well. This chapter examines how the financial crisis differentially affected households at different parts of the income and wealth distributions. Our results show that all households lost about the same percentage of their wealth in that period. But because households in the top 10% of the wealth distribution owned many different kinds of assets, their wealth soon recovered. The bottom 80% of the wealth distribution had more of their wealth tied up in housing. We show that financial distress, indexed by foreclosures, being behind in mortgage payments, and changes in house prices were particularly concentrated in households in the bottom 80% of the wealth distribution. These households lost a large part of their wealth and have not yet recovered. Households that were most deeply affected were those who entered the housing market late and took out subprime loans. African American and Hispanic households were particularly susceptible as they bought houses late in the price bubble often with subprime loans.