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Globally, inequality may be shrinking as economic power shifts and new markets emerge, Milanovic’s most recent research suggests. Within many nations, just the opposite trend is at work: The gap between rich and poor is widening. So where are we on inequality and why does it matter? Why should we care about inequality?
- Drawing A Picture of Inequality
- How Inequality Has Changed
- Why Care About Inequality
- What Causes Inequality and What Can Be Done
- References
The picture we draw of inequality depends a lot on how we measure it. Most discussions focus on people’s income and wealth, though these are simply easily measured proxies for overall welfare. McGregor et al. (2019) point out that, when it comes to welfare, the type of wealth matters (whether it is liquid or illiquid, earned or inherited) and that ...
Income and wealth inequality increased in most of the OECD between 1980 and the 2008 crisis, most notably in Finland, Sweden, and the UK. Nolan and Valenzuela (2019) find that, since the 2008 crisis, inequality in the OECD countries “went down or was stable as often as it increased”. But even in those countries where inequality did not increase or ...
There are several reasons. The first, often linked to notions of ‘fairness’, is that inequality matters for its own sake. Fairness is hard to pin down, but perhaps the widest agreement can be found in the idea of a level playing field, or ‘equality of opportunity’. This is closely linked to Sen’s (1985) ‘capabilities approach’ to welfare, where pol...
What, then, causes inequality, and what can be done to mitigate it? Furceri and Ostry (2019) point to important roles of the stages of economic development, demographics, technology, globalisation, fiscal policy, and structural reforms. To these, Nolan and Valenzuela add financial market influences and capital income, and Gans et al. (2019) and Enn...
Atkinson, A B (1999), “Is rising inequality inevitable? A critique of the Transatlantic Consensus”, UNU/WIDER. Baldwin, R, and B Weder di Mauro (eds.) (2020), Economics in the Time of COVID-19, London: CEPR. Breen, R (2019), “Education and intergenerational social mobility in the US and four European countries”, Oxford Review of Economic Policy35(3...
- Economic inequality can give wealthier people an unacceptable degree of control over the lives of others. If wealth is very unevenly distributed in a society, wealthy people often end up in control of many aspects of the lives of poorer citizens: over where and how they can work, what they can buy, and in general what their lives will be like.
- Economic inequality can undermine the fairness of political institutions. If those who hold political offices must depend on large contributions for their campaigns, they will be more responsive to the interests and demands of wealthy contributors, and those who are not rich will not be fairly represented.
- Economic inequality undermines the fairness of the economic system itself. Economic inequality makes it difficult, if not impossible, to create equality of opportunity.
- Workers, as participants in a scheme of cooperation that produces national income, have a claim to a fair share of what they have helped to produce.
Sep 22, 2015 · Inequality drives status competition, which drives personal debt and consumerism. More equal societies promote the common good – they recycle more, spend more on foreign aid, score higher on the Global Peace Index .
Jul 10, 2008 · This chapter addresses the following questions: why should citizens and policy makers should want low inequality? Why should we object to inequality? Should we focus on equality of opportunity or equality of outcomes?
Aug 14, 2024 · In this post, Branko Milanovic, Senior Scholar at the Stone Center on Socio-Economic Inequality at CUNY and Visiting Professor at the LSE’s International Inequalities Institute, steps back to address the fundamental question: why should we care about the level of inequality in society?
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Sep 16, 2014 · Top-majority inequality, then, is likely to be an important pattern in coming years. The question is, how do we react? Probably in one of three ways: Reaction 1 to Top-Majority Inequality:...
