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Working Papers

Original working papers and reports published by the III.

Top Incomes during Wars, Communism and Capitalism: Poland 1892-2015
Pawel Bukowski and Filip Novokmet

This study presents the history of top incomes in Poland. We document a U-shaped evo-lution of top income shares from the end of the 19th century until today. The initial high level, during the period of Partitions, was due to the strong concentration of capital income at the top of the distribution. The long-run downward trend in top incomes was primarily induced by shocks to capital income, from destructions of world wars to changed political and ideological environment. The Great Depression, however, led to a rise in top shares as the richest were less adversely affected than the majority of population consisting of smallholding farmers. The introduction of communism abruptly reduced inequalities by eliminating private capital income and compressing earnings. Top incomes stagnated at low levels during the whole communist period. Yet, after the fall of communism, the Polish top incomes experienced a substantial and steady rise and today are at the level of more unequal European countries. While the initial upward adjustment during the transition in the 1990s was induced both by the rise of top labour and capital incomes, the strong rise of top income shares in 2000s was driven solely by the increase in top capital incomes, which make the dominant income source at the top. We relate these developments to processes associated with the new phase in globalisation. 

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The Wider Impacts of High-Technology Employment: Evidence from U.S. Cities
Tom Kemeny and Taner Osman

Innovative, high-technology industries are commonly described as drivers of regional development. ‘Tech’ workers earn high wages, but they allegedly generate knock-on effects throughout the local economies that host them, producing new jobs and raising wages in nontradable activities. At the same time, in iconic high-tech agglomerations like the San Francisco Bay Area, the home of Silicon Valley, the success of the tech industry creates tensions, in part as living costs rise beyond the reach of many non-tech workers. Across a large sample of US cities, this paper explores these issues systematically. Combining annual data on wages, employment and prices from the Quarterly Census of Employment and Wages, the Department of Housing and Urban Development and the Consumer Price Index, it estimates how growth in tradable tech employment affects the real, living-cost deflated wages of local workers in nontradable sectors. Results indicate that high-technology employment has significant, positive, but substantively modest effects on the real wages of workers in nontradable sectors. However, in cities with highly price-inelastic housing markets, the relationship is inverted, with tech generating negative externalities for nontradable workers. 

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Inequalities in the application of welfare sanctions in Britain
Robert de Vries, Aaron Reeves and Ben Baumberg-Geiger

Unemployed people in Britain who are in receipt of government welfare benefits can have these benefits stopped if they fail to comply with certain conditions. Such a stoppage is known as a 'benefit sanction'. This working paper has two aims: 1) to provide an introduction to the British system of sanctions, specifically as it applies to unemployed people who are not disabled, and ii) to identify demographic inequalities in the application of sanctions. Using data published by the UK Department of Work and Pensions, we find that some groups of unemployed claimants (younger people, men, and ethnic minorities) are at substantially higher risk of experiencing a sanction. This paper will be updated at a later date with analyses investigating the drivers of this inequality.

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Intersecting Inequalities and the Sustainable Development Goals: insights from Brazil
Naila Kabeer and Ricardo Santos

The international development community has long been pre-occupied with the reduction of absolute income poverty, relegating concerns with inequality to the margins of its policy agenda. The Millennium Development Goals, for instance, which were adopted by 189 world leaders at the 2000 Millennium Summit, defined the reduction of absolute poverty by 2015 as its overarching goal. However, concerns about the dramatic rise in income inequality across the world have been growing over the last few decades and came to the forefront of public consciousness in the wake of the global financial crisis of 2008. At the same time, assessments of national progress on the Millennium Development Goals made it clear that income inequality alone did not explain the distribution of gains and losses across countries. Rather it was the intersection of income inequality, marginalized social identities and, very often, locational disadvantage which led to the systematic exclusion of certain groups. In recognition of this, the Sustainable Development Goals which became the basis of the new post-2015 international development agenda now includes a commitment to the reduction of income and other inequalities, summarized as the principle of ‘leave no one behind’. Our paper uses national data from Brazil between 2002 and 2013 to examine retrospectively how it has performed on some of the indicators relating to the inclusive principles articulated by the SDGs. We have selected this period in Brazil because at a time when income inequalities were rising in most countries of the world, they were declining in Brazil. Our paper examines the extent to which this decline in income inequality was accompanied by a decline in intersecting inequalities and explores some of the economic, political and social explanations given for the country’s performance. 

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Understanding the Determinants of Penal Policy: crime, culture and comparative political economy
Nicola Lacey, David Soskice and David Hope

This review sets out four main explanatory paradigms of penal policy—focusing on, in turn, crime, cultural dynamics, economic structures and interests, and institutional differences in the organisation of different political economies as the key determinants of penal policy.  We argue that these paradigms are best seen as complementary rather than competitive, and present a case for integrating them analytically in a comparative political economy framework situated within the longue durée of technology regime change.  To illustrate this, we present case studies of one exceptional case—the United States—and of one substantive variable—race. Race has been thought to be of importance in most of these paradigms and provides a pertinent example of how the different dynamics intersect in practice. We conclude by summarising the explanatory challenges and research questions that we regard as most urgent for the further development of the field, and point to the approaches that will be needed if scholars are to meet them.

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De-Democratisation and Rising Inequality: The Underlying Cause of a Worrying Trend
Dena Freeman

This paper is concerned with the question of why economic inequality has increased so dramatically in recent decades, and in particular, with the seemingly paradoxical situation that this upswing in inequality has taken place at the same time as a major spread of democracy worldwide. This paper argues that democracy itself has changed in this period and that globalization has led to a process of economic de-democratisation – by (1) the direct removal of certain economics matters from political control, (2) by increasing restrictions on the policy options available to policy-makers, and (3) by transformations in the structure of the policy-making process itself. In each of these shifts the representation of capital has been significantly increased, while that of labour has been correspondingly decreased. This analysis has major implications for how we should go about tackling the contemporary rise in inequality and suggests that it is imperative to democratise economic policy making at both the national and the global level.  If we are serious about tackling inequality then we must be serious about democracy.

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A Relational Analysis of Top Incomes and Wealth: Economic Evaluation, Relative (Dis)advantage and the Service to Capital
Katharina Hecht

While an impressive body of economic literature documents increases in top incomes and wealth in liberal market economies, few studies focus on the social and cultural processes constitutive of this inequality. Drawing on a mixed-methods study in the UK, this article elaborates how top incomes and wealth are made sense of and produced by economic ‘elites’ through the cultural process of economic evaluation. Economic evaluative practices are based on the idea that ‘the market’ is a neutral and fair instrument for the distribution of resources. Due to economic evaluation and inequality at the top, top income earners experience relative (dis)advantage; while recognizing their advantage compared to the general population they experience disadvantage when ‘looking up’. Top incomes are produced via economic evaluative practices which conceptualize the value of labour based on increases in the value of capital. Hence the legitimating purpose of top incomes and wealth is service to capital. 

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The rise and fall of Africa's bureaucratic bourgeoisie: public employment and the income elites of postcolonial Kenya and Tanzania
Rebecca Simson

In 1961 Frantz Fanon scathingly characterised the emerging African elite as a bourgeoisie of the civil service. Many others have since described Africa’s public sector employees as a privileged rentier class that grew disproportionately large in relation to the continent’s under-developed private sector. Is this characterisation accurate? Using household budget survey and administrative data from Kenya and Tanzania, this paper aims to situate public sector employees in two African countries within their respective national income distributions and establish the share of high-income households that were headed by public servants. It finds that while public sector employees formed a considerable share of the top 1% - 0.1% at independence, their share of the broader middle class was never that large and fell substantially over the postcolonial era.

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Wealth, Top Incomes and Inequality
Frank Cowell, Brian Nolan, Javier Olivera and Philippe Van Kerm

Although it is heartening to see wealth inequality being taken seriously, key concepts are often muddled, including the distinction between income and wealth, what is included in "wealth", and facts about wealth distributions. This paper highlights issues that arise in making ideas and facts about wealth inequality precise, and employs newly-available data to take a fresh look at wealth and wealth inequality in a comparative perspective. The composition of wealth is similar across countries, with housing wealth being the key asset.  Wealth is considerably more unequally distributed than income, and it is distinctively so in the United States. Extending definitions to include pension wealth however reduces inequality substantially. Analysis also sheds light on life-cycle patterns and the role of inheritance. Discussion of the joint distributions of income and wealth suggests that interactions between increasing top income shares and the concentration of wealth and income from wealth towards the top is critical.

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The impact of benefit sanctioning on food insecurity: a dynamic cross-area study of food bank usage in the UK
Rachel Loopstra, Jasmine Fledderjohann, Aaron Reeves and David Stuckler

Household food security, which may be compromised by short-term income shocks, is a key determinant of health. Since 2012, the UK witnessed marked increases in the rate of ‘sanctions’ applied to unemployment insurance claimants, which stop payments to claimants for a minimum of four weeks. In 2013, over 1 million sanctions were applied, potentially leaving people facing economic hardship and driving them to use food banks. The paper tests this hypothesis by linking data from the Trussell Trust Foodbank Network with records on sanctioning rates across 259 local authorities in the UK. 

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Land Politics under Kenya's New Constitution: Countries, Devolution, and the National Land Commission
Catherine Boone, Alex Dyzenhaus, Seth Ouma, James Kabugu Owino, Catherine Gateri, Archiba Gargule, Jackie Klopp, and Ambreena Manji

Kenya's new constitution, inaugurated in August 2010, altered the institutional structure of the state in complex ways. In the land domain, reform objectives were as explicit and hard-hitting as they were anywhere else. Reform of land law and land administration explicitly aimed at putting an end to the bad old days of overcentralization of power in the hands of an executive branch considered by many to be corrupt, manipulative, and self-serving. This research asks how these significant reforms are changing land control and governance in rural Kenya.

This project was partly supported by the III Research Innovation Fund.

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Who are the Global Top 1%?
Sudhir Anand and Paul Segal

This paper presents the first in-depth analysis of the changing composition of the global income rich and the rising representation of developing countries at the top of the global distribution. We construct global distributions of income between 1988 and 2012 based on both household surveys and the new top incomes data derived from tax records, which better capture the rich who are typically excluded from household surveys. We find that the representation of developing countries in the global top 1% declined until about 2002, but that since 2005 it has risen significantly. This coincides with a decline in global inequality since 2005, according to a range of measures. We compare our estimates of the country-composition and income levels of the global rich with a number of other sources – including Credit Suisse’s estimates of global wealth, the Forbes World Billionaires List, attendees of the World Economic Forum, and estimates of top executives’ salaries. To varying degrees, all show a rise in the representation of the developing world in the ranks of the global elite.

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Gendering the elites: an ethnographic approach to elite women's lives and the re-production of inequality
Luna Glucksberg

This paper argues that the process by which accumulated capital is socialized and passed down the generations of the 'super-rich' is gendered in nature, heavily reliant on women, and currently under-researched. The author addresses this gap ethnographically, focusing on the gendered labour that women perform to sustain and reproduce the dynaist projects of elite families. In light of this data, elite London emerges as a social space structured around strong hierarchies not just of class but also gender. The paper concludes that it is essential to understand more about the interplay of these two structuring principles within elite spaces, focusing on the 'invisible' labour performed by elite women.

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The measurement of health inequalities: does status matter?
Joan Costa-Font and Frank A. Cowell

This paper examines several status concepts to examine self-assessed health inequality using the sample of world countries contained in the World Health Survey.  The authors also perform correlation and regression analysis on the determinants of inequality estimates assuming an arbitrary cardinalisation.  The findings indicate major heterogeneity in health inequality estimates depending on the status approach, distributional-sensitivity parameter and measure adopted.  The authors find evidence that pure health inequalities vary with median health status alongside measures of government quality.

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Top incomes and the gender divide
Tony Atkinson, Sarah Voitchovsky and Alessandra Casarico

In the recent research on top incomes, there has been little discussion of gender.  How many of the top 1 and 10% are women?  A great deal is known about gender differentials in earnings, but how far does this carry over into the distribution of total incomes, bringing self-employment and capital income into the picture?  We investigate the gender divide at the top of the income distribution using tax record data for a sample of 8 countries with individual taxation.

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The challenge of measuring UK wealth inequality
Facundo Alvaredo, Tony Atkinson and Salvatore Morelli

The concentration of personal wealth is now receiving a great deal of attention as an important part of understanding rising income inequality. But how can we measure the wealth of the super-rich? This Working Paper looks at the challenges of understanding the assets of the top 1% and 0.1%.

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European Identity & Redistributive Preferences
Joan Costa-Font and Frank A. Cowell

Did the introduction of the Euro change public preferences for redistribution? This Working Paper examines how the emergence of a European identity impacts support for poverty reduction policies.

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Inequality: what can be done?
Tony Atkinson

Economic inequality has become centre stage in the political debate, but what the political leaders have not said is what they would do about it. In this Working Paper, Tony Atkinson seeks to show what could be done to reduce the extent of inequality if we are serious about that objective.

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An interview with Thomas Piketty
Mike Savage

III Co-Director Mike Savage's interview focuses on Thomas Piketty’s future intellectual plans after Capital in the 21st Century. Includes insights into Piketty's views of new elites, social class, Bourdieu and Marx.

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