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Wealth inequality and stratification by social classes in 21st-century Europe
Wealth is a central determinant of life chances and intergenerational status persistence in modern societies. Yet, sociologists traditionally overlooked its role in class measurement and inequality, while most economists focused on the elites. This article reconciles sociological and economic perspectives on class analysis by examining the relationship between classes and wealth inequality versus income. Drawing from the Luxembourg Wealth Study (2002-2018) in five European countries, we test whether occupational classes, based on the entire division of labour, keep up with rising economic inequality trends. In contrast to bold claims on class death or decomposition, inequality of outcomes in wealth accumulation is firmly rooted across occupational classes in contemporary capitalism, potentially harming future equal opportunity and social mobility. Still, occupational classes better capture between-group income inequality and stratification than wealth, emphasising the importance of economic resources beyond labour market attachment that spark advances in social class theory and measurement.
Analysing inequalities within the LSE student body: bringing social class into the mix
We report the results of a study of LSE home undergraduate students which addresses the significance of social class background in shaping a range of student outcomes. We explore how class background and other sociodemographic variables affect access (who gets in), study choice (who studies what), attainment (how students perform in summative assessment), and satisfaction (how students rate their programme). We show that parental class background plays a major role across all these dimensions and is a major force shaping LSE undergraduate student outcomes. This is evident from observing raw bivariate associations and remains true when we report linear regression models controlling for numerous other socio-demographic and institutional factors. We also demonstrate powerful intersectional associations, especially with race, and also with declared disability status. Our results underscore the need to take social class seriously in the analysis of the undergraduate experience, both in analytical and in policy terms.
The interaction of economic and political inequality in Latin America
We investigate how economic inequality can persist in Latin America in the context of radical falls in political inequality in the last decades. Using data from Colombia, we focus on a critical facet of democratization - the entry of new politicians. We show that initial levels of inequality play a significant role in determining the impact of political entry on local institutions, policy, and development outcomes, which can impact future inequality. A vicious circle emerges whereby policies that reduce inequality are less likely to be adopted and implemented in places with relatively high inequality. We present evidence that this is caused both by the capture of new politicians and barriers to institution and state capacity building, and also by the fact that politicians committed to redistribution are less likely to win in relatively unequal places. Our results, therefore, help to reconcile the persistence of economic inequality with the new political context.
Inequality in the early years in LAC: A comparative study of size, persistence, and policies
Gaps in child development by socioeconomic status (SES) start early in life, are large and can increase inequalities later in life. We use recent national-level, cross-sectional and longitudinal data to examine inequalities in child development (namely, language, cognition, and socio-emotional skills) of children 0-5 in five Latin American countries (Chile, Colombia, Mexico, Peru and Uruguay). In the cross-section analysis, we find statistically significant gaps with inequality patterns that widely differ across countries. For instance, gaps in language and cognition for Uruguay and Chile are much smaller than those for Colombia and Peru. When turning to the longitudinal data, average SES gaps are similar to those of the cross-section in language but differ substantially in cognition, mainly in Uruguay where they emerge as more unequal when cohort effects do not operate. Importantly, we also find that the ECD gaps found at early ages (0-5), still manifest 6-12 years later in almost all locations and realms in which we have measures of early child development, but they do not increase with age. Results are robust to using different measures of inequality (income and maternal education). Gaps are smaller but generally remain when adjusting for possible explanatory factors (e.g., family structure, parental education, geographic fixed effects). To reduce ECD inequality and promote equality in later life outcomes, policymakers should look to implementing evidence-based interventions at scale to improve developmental outcomes of the most disadvantaged children in society.
Tax flight? Britain’s wealthiest and their attachment to place
Britain’s policymakers, like many around the world, are concerned about the emigration of top taxpayers in response to tax policy. Existing evidence on this kind of tax flight is either quantitative or comes from a handful of high-profile individuals issuing politicised warnings about tax migration in the media. We know little about how the wealthy actually consider their tax burden when making decisions about where to live. This report summarises new qualitative research exploring the migration decisions of Britain’s wealthiest and highest earning individuals. Specifically, we draw on in-depth interviews with 35 individuals, all of whom were in the top 1% of the distribution by income and/or wealth, to explore whether top earners and wealth holders in Britain would consider migrating for tax reasons and what they value most when deciding where to live.
Behavioral responses to wealth taxation: evidence from a Norwegian reform
We analyze behavioral responses to wealth taxation, estimating the causal effects of a unique municipal wealth tax reform in Norway. We exploit variation from the single-period municipal reform reducing the marginal tax rate (MTR) on wealth exclusively in the northern Norwegian municipality of Bø from 0.85% to 0.35%, since 2021. Mimicking the behaviour of a tax haven, Bø represents the first municipality to unilaterally reduce the municipal wealth tax rate since the establishment of wealth taxation in Norway in 1892. We document a significant 66.6% increase in average taxable wealth in response to a 1 percentage point drop in the wealth tax rate. The elasticity of taxable wealth increases to 71.6% when focusing exclusively on wealth taxpayers. We also estimate a significant but more modest 10.3% jump in the weighted mass of wealth taxpayers in the treated municipality. Non-real effects of the reform dominate: mobility of wealthy taxpayers appears as the major behavioral response to the change in the net tax rate, accounting for a staggering 79% of the post-treatment total net wealth in the treated municipality (up from 19% in the pre-reform period). These results emerge in a context with third-party reported wealth data with negligible measurement error, limited evidence of bunching, highly enforced residence-based wealth taxation, and a low degree of out-migration rates.
Degrees of vulnerability to poverty: a low-income dynamics approach for Chile
I propose an empirical framework to identify different degrees of vulnerability to poverty using two vulnerability lines that classify currently non-poor people into risk groups: high, moderate and low risk of falling into poverty in the next period. The latter corresponds to the income secure middle class. My approach makes two contributions. First, it extends recent research that defines the middle class using a vulnerability threshold by introducing a new subdivision of the vulnerable group that would be useful in practice for public policy objectives. Second, it uses two models to predict both the probability of entering poverty and household income as part of the estimation procedures. The former controls for initial conditions effects and attrition bias, and the latter addresses the retransformation problem. I apply my approach to Chile using longitudinal data from the P-CASEN 2006-2009. The resulting vulnerability cut-offs (using the upper-middle-income country poverty line) are $20.0 per person per day for the low vulnerability line and $9.9 pppd for the high vulnerability line (both in 2011 PPP). My vulnerability lines differ significantly from those estimated in previous research on vulnerability and the middle class in Latin America. I argue that previous research has underestimated the size of the population at risk of falling into poverty and overestimated the growth of the middle class. Misclassifying the vulnerable as middle class limits their access to anti-poverty policies.
Income inequality in the 21st century Poland
This paper combines micro-level tax data, household surveys and national accounts data to provide consistent series of income distribution in Poland over the 2000-2018 period. We find that inequalities in Poland are one of the largest in Europe. In 2018, the share of pretax and pre-transfer income accrued to the top 10% is 37.4%, to the next 40% is 41.1%, and to the bottom 50% is 21.5%. The top 1% earns 13.4% of the total income. The increase in income inequality during this period was largely driven by high business incomes in top income shares. The extent of redistribution in Poland is modest. The tax system is regressive at the top of the income distribution due to lower taxation of business income and the low burden of social contributions. Finally, we show that top income groups are dominated by business owners, males, and big city dwellers, and these groups have been the largest beneficiaries of Poland’s strong growth since 2000. Gender inequality has been high and stable in Poland, with a steeply decreasing female share with income rank (e.g. the share of females in top 0.1% group was 18% in 2018).
Opting out from public services and the social contract in Latin America
The seemingly upward trend in opting out from public services and the segregation of income groups in public and private education and health systems has raised concerns about the future of an already fragmented social contract in Latin America. In this chapter, we examine the evolution of the use of private education and private health insurance in selected countries during the first two decades of the 2000s. We also examine the socio-demographic correlates of the decision to opt out, and the association it has with attitudes that are relevant to understand the foundations of the social contract in the region. Overall, the evidence suggests that scholars’ concerns about the fragility of the social contract are justified, but with some nuances. Wealthy households are mostly opting out of the public education system, and the middle-class is split with a substantial proportion of households opting for private schools. On the other hand, opting out from public health is only prevalent among wealthy households, and even within that group the share of households who are paying for a private health insurance is much smaller than the share of households who opt for private education. For both policy domains, however, we find that people who use private services have worse evaluations of public services, express less support for the public provision of those services, and more generally, are less supportive of redistribution compared to people inside the public systems. We discuss the implications of these descriptive statistics for the sustainability of the public provision of services and the social contract.
Gender inequality in Latin America and the Caribbean
This chapter examines gender inequality focusing on two critical spheres in which gender inequality is generated: education and work. Our objective is to provide a current snapshot of gender inequality across key indicators as well as a dynamic perspective that highlights successes and failures. We facilitate a cross-country comparison as well by grouping countries within Latin America by their level of economics development and drawing comparisons with countries outside the region. Finally, we reflect on differences in the ways that gender inequalities play out across different socio-economic groups, particularly those that highlight other sources of inequality.
Redistribution, horizontal inequity, and reranking: direct taxation in the UK, 1977–2020
We decompose the redistributive effect of direct taxes into vertical, horizontal, and reranking components applying the methods of Urban and Lambert (Public Finance Review, 2008). In the first such application to the UK, and using yearly data covering 1977–2020, we find that redistributive effect increased over the period. However, there is no clear trend in horizontal inequity and this component forms a very small fraction of total redistributive effect by comparison with reranking and especially vertical components. It is also the vertical component that best tracks trends in redistributive effect. We give specific attention to the choice of the bandwidth used to define ‘close equals’ in terms of pre-tax income. We also show that implausible estimates of the horizontal inequity component arise for some years regardless of bandwidth used.
Does global warming worsen poverty and inequality? An updated review
We offer an updated and comprehensive review of recent studies on the impact of climate change, particularly global warming, on poverty and inequality, paying special attention to data sources as well as empirical methods. While studies consistently find negative impacts of higher temperature on poverty across different geographical regions, with higher vulnerability especially in poorer Sub-Saharan Africa, there is inclusive evidence on climate change impacts on inequality. Further analyzing a recently constructed global database at the subnational unit level derived from official national household income and consumption surveys, we find that temperature change has larger impacts in the short term and more impacts on chronic poverty than transient poverty. The results are robust to different model specifications and measures of chronic poverty and are more pronounced for poorer countries. Our findings offer relevant inputs into current efforts to fight climate change.
Spatial inequalities in Latin America: mapping aggregate to micro-level disparities
This paper comprehensively examined the various scales at which spatial inequalities manifest in the LAC region. Using information from the Luxembourg Income Study (LIS) database we were able to decompose and compare inequality between LAC countries and high-income countries in a within large urban areas, smaller urban areas and rural areas component and a between component for these three groups. The analysis reveals, perhaps unsurprisingly, that Latin America is more unequal in all of these spatial dimensions. However, it also revealed that in LAC, within small urban areas inequality is the most important term. This is consistent with the results of Ferré, et al. (2012) and ECLAC (2010, 2016). It implies that more emphasis should be placed on poverty rates in smaller urban areas and not just large metropolitan areas. Also, a prominent feature of LAC inequality compared to developed countries is the wide gap between average per capita incomes in rural areas compared to urban areas and, to a lesser extent, between small and large urban areas.
Education inequalities in Latin America and the Caribbean
Education is a crucial asset for a country’s economic prospects and for its inhabitants. In addition to its direct impact on growth via the accumulation of human capital, it is a critical ingredient in producing an informed citizenry, enhancing their ability to obtain and exert human and political rights and their facility to adapt to changing environments (generated by, e.g., technological or climatic change) among other benefits. In this chapter, we study education inequality in LAC (both in quantity and quality), assess how it emerges and amplifies or dampens existing inequalities, and examine the interaction of education inequality with other forms of inequality, primarily income and labor market outcomes. Our analysis is based on primary data from multiple sources.
Health systems and health inequalities in Latin America
In this chapter we categorise the health systems of Latin America based on how segmented their health insurance coverage is. Except for Brazil, Cuba, and Costa Rica which conform relatively well to a traditional Beveridge system, the health systems of most countries share characteristics of Bismarckian and Beveridge traditional systems.
Preferences for redistribution in Latin America
This chapter examines the redistributive preferences of Latin Americans and investigates the factors that shape them. Using a detailed survey in eight Latin American countries, the study sheds new light on redistributive preferences and explores which aspects of redistribution are more popular and among which groups. The roles of selfinterest, perceptions of inequality, values, and the relationship between citizens and the public sphere in shaping attitudes to redistribution are discussed.
Inequality and market power in Latin America and the Caribbean
Firms’ market power may exacerbate income inequality. We investigate this relationship among firms in Latin America and the Caribbean (LAC), where this phenomenon remains understudied. We use firm-level data for formal firms in 16 countries in LAC and 31 peer economies with similar levels of GDP per capita but much less inequality. We study 1) The extent and dispersion of market power among LAC’s firms compared to firms in peer economies; 2) the relationship between market power and the labor share of revenue at the firm level; and 3) the implications of that relationship for the aggregate labor share of income, which depends on the joint distribution (across firms) of market power, the labor share, and firms’ size. Markups (markdowns) measure product (labor) market power. Our results indicate that the average markup in the region is 20 percent above marginal costs, while average wages are 46 percent below the marginal revenue product of labor. The negative relationship at the firm level between the labor share and combined market power is driven by labor rather than product market power. Finally, we show that labor market power is more pronounced among larger firms, magnifying the effect of market power on the aggregate labor share and income distribution. However, there is no indication that market power is more acute or dispersed in LAC than in its peers, nor does it appear to induce more inequality than in those countries.
Distributional effects of taxation in Latin America
This chapter analyzes the incidence on income distribution by a comprehensive array of direct and indirect taxes in ten Latin American countries circa 2018. The study finds that although there is a significant heterogeneity, the redistributive impact is equalizing for direct taxes and unequalizing for indirect taxes. Overall, redistribution through taxes, without accounting for spending effects and interactions, is slightly equalizing for some countries and unequalizing for others, but the burden on the poor is high and even higher than on the rich. This is mainly a consequence of the high share of indirect taxes in the tax structures, and of low personal income tax collection and coverage. The inclusion of the redistributive effect of the corporate income tax contributes to improve redistribution and accounts for better comparison with the redistributive impact in more developed countries, where dividends are taxed heavily with personal income taxes rather than corporate income taxes as in Latin America. High levels of evasion and informality make payroll taxes more regressive in integrated labor markets with high informality, but make indirect taxes less regressive, since the poor pay little or no indirect taxes on some of their purchases.
Calculating the redistributive impact of pension systems in LAC
This paper examines the implicit subsidies within pension systems across Latin America and the Caribbean (LAC) region. We first calculate the theoretical benefits of pension for hypothetical workers in 25 countries in LAC. We show that, on average, LAC's pension systems are subsidized, as they provide pensions above what workers would have obtained by investing pension contributions in a safe asset. Similarly, pension systems are designed to be progressive by offering higher replacement rates (pensions relative to earnings) for low-income workers. Despite this progressivity, in some countries, absolute subsidies could be higher for high-income workers. This occurs because the cost of one percentage point of the replacement increases with the average pension. Second, using data from social protection surveys, we estimate the incidence of pension systems in five LAC countries. We show that, on average, all five systems provide important subsidies to those workers who obtain a pension. However, given the high levels of informal work, in some countries, those subsidies are highly concentrated among high-income workers. Variation is large across countries. The three highest labor income deciles concentrate 70-95% of all subsidies in defined benefit systems such as Paraguay and Colombia. In defined contribution systems, subsidies are much more progressive, but still, because low-income workers do not qualify for minimum pensions, between 50-60% of subsidies concentrate in the high-income deciles. Countries like Chile, with explicit subsidies targeted at the bottom of the income distribution, obtain a more progressive distribution of subsidies. Because of relatively low participation rates, women have a weaker link with the pension system. They are also less likely to benefit from implicit subsidies. Finally, we show that non-contributory pensions, if well-targeted, largely improve the redistributive properties of pension systems in LAC.
Cash transfers, poverty, and inequality in Latin America and the Caribbean
We assess the non-contributory cash transfer systems in 17 Latin American and Caribbean countries to identify factors that keep them from reducing poverty and inequality. To perform this assessment, we analyze three dimensions of size (number of beneficiaries, size of transfer per beneficiary, and size of total budget) and three dimensions of targeting (coverage, leakage, and quality of demographic targeting). We identify 67 programs, which fall into three broad categories: conditional cash transfers, non-contributory pensions, and other transfers. We use an international poverty line of 6.85 dollars PPP per day (similar to the average national poverty line of upper middle-income countries), and adjust survey weights to correct for the fact that household survey data often underestimates the official number of transfer beneficiaries compared to administrative sources. We show that two key factors limit the effect of cash transfer programs on poverty and inequality: the small size of their transfers and their historic undercoverage of the population living in poverty. Transfers represent approximately 33% of the poverty gap. Additionally, only 55% of the population in poverty benefits from these programs. Forty-one percent of people living in households that receive at least one non-contributory transfer are above the poverty line. Children and Indigenous people are underrepresented, relative to their poverty rate, in the rosters of beneficiaries. Brazil, Suriname, Argentina, Chile, Costa Rica, Panama, and Uruguay consistently earn the highest scores across the assessment categories. Our policy recommendations include: (i) intensifying efforts to increase coverage among the poor, using modern poverty mapping techniques along with active, on-the-ground searches and (ii) recertifying eligibility for transfer programs more frequently by using highly interoperable administrative data and social registries. Both efforts are needed to create more efficient income protection systems that address both structural and transient poverty.
Fiscal policy, income redistribution, and poverty reduction in Latin America
This paper uses standard fiscal incidence analysis to study how much income redistribution and poverty reduction are accomplished through the fiscal system in eighteen Latin American and Caribbean (LAC) countries. We show there is considerable heterogeneity in the income inequality and poverty-reducing power of LAC fiscal systems. While all LAC fiscal systems reduce income inequality, fiscal systems in nine LAC countries are poverty-increasing, and this startling characteristic has not improved over time. When analyzing specific fiscal elements, we find that direct taxes, direct transfers, and in-kind transfers are all equalizing, and spending on education and health is often pro-poor. Moreover, contrary to expectations, indirect taxes and subsidies are more frequently equalizing than unequalizing.
The political economy of redistribution and (in)efficiency in Latin America and the Caribbean
Predominant views on the political economy of Latin America and the Caribbean tend to emphasize that elite domination helps to understand the high levels of inequality. The contemporary fiscal version of that assertion goes something like “the rich are powerful and they don't like taxes, hence we have little taxation and little redistribution.” That is a good approximation to the reality of some countries, but not of others. There are cases in the region where there are high levels of taxation and non-negligible redistributive efforts. But in some of those cases such redistribution comes hand in hand with macroeconomic imbalances, high inflation, low growth, as well as low-quality public policies. When redistributive efforts are short-sighted and attempted with inefficient public policies, fiscal imbalances lead to inflation and to frequent macroeconomic crises that reduce growth and thwart poverty reduction efforts. The argument of this paper is that there are various possible political configurations (including elite domination and populism among others) that lead to different economic and social outcomes (including the degree of redistribution and others). We postulate that each configuration of social outcomes emerges out of different political economy equilibria. Different countries in the region will be in different political economy equilibria, and hence will have different combinations of political economy syndromes and of socioeconomic outcomes. In this paper, we characterize the countries regarding the size of the public sector, how much fiscal redistribution there is, and how efficient this public action is. We summarize various strands of literature that attempt to explain some elements of that fiscal vector one at a time; and then attempt to provide a simple framework that might explain why different countries present different configurations of size, distributiveness, and efficiency.
Racial and ethnic inequality in Latin America
This chapter examines socioeconomic inequality in Latin America through the lens of race and ethnicity. We primarily use national census data from the International Public Use Micro Data Sample (IPUMS). Since censuses use inconsistent measures of race and ethnicity, we also draw on two additional measures from the Latin American Public Opinion Project (LAPOP). Unlike censuses, LAPOP data offer a more consistent ethnoracial scheme across countries and a unique interviewer-rated skin color measure. Our study shows that black and indigenous populations and those with darker skin color experience educational, income, and occupational disadvantages, even after controlling for their social origins. However, inequality and hierarchical ordering of Afro-descendants, indigenous peoples, mestizos, whites, and others vary across countries. We include an extended examination of educational inequality in Brazil, the region’s largest country. The chapter concludes with an exploration of public policy approaches to address black and indigenous disadvantage across Latin America while also highlighting the case of Brazil, where targeted antiracism policy is most advanced.
Health inequalities in Latin American and the Caribbean: child, adolescent, reproductive, metabolic syndrome and mental health
Our health constitutes a fundamental aspect of our well-being. It is also a key factor in determining our contribution to market and non-market output. Health inequality refers to the unequal realization of health outcomes between different groups in the population. Systematic disparities in health outcomes and in access to health resources not only undermine basic principles of fairness and social justice but also contributes towards perpetuating poverty and disadvantage.
In this chapter, we start by presenting evidence on how the burden of disease in Latin America and the Caribbean (LAC) has changed during the last 30 years. Consistent with the fall in fertility and population aging, the region has shifted from a burden of disease dominated by maternal, neonatal, and communicable disease in the 1990s to one dominated by cardiovascular disease, cancers, diabetes, and increasingly by mental health disorders.
Seventy-five years of measuring income inequality in Latin America
Drawing on a comprehensive compilation of quantile shares and inequality measures for 34 countries, including over 5,600 estimated Gini coefficients, we review the measurement of income inequality in Latin America and the Caribbean over the last seven decades. Although the evidence from the first quarter century – roughly until the 1970s – is too fragmentary and difficult to compare, clearer patterns emerge for the last fifty years. The central feature of these patterns is a broad inverted U curve, with inequality rising in most countries prior to the 1990s, and falling during the early 21st Century, at least until the mid-2010s, when trends appear to diverge across countries. This broad pattern is modified by country specificities, with considerable variation in timing and magnitude. Whereas this broad picture emerges for income inequality dynamics, there is much more uncertainty about the exact levels of inequality in the region. The uncertainty arises from the disparity in estimates for the same country/year combinations, depending on whether they come from household surveys exclusively; from some combination of surveys and administrative tax data; and on whether they attempt to scale income aggregates to achieve consistency with National Accounts estimates. Since no single method is fully convincing at present, we are left with (often wide) ranges, or bands, of inequality as our best summaries of inequality levels. Reassuringly, however, the dynamic patterns are generally robust across the bands.
Labor market turnover and inequality in Latin America
This paper describes the patterns of worker turnover in selected Latin American countries and their implications for wage inequality. It documents a higher positive annual wage growth rate for jobto-job changers compared to stayers, due to turnover capturing the immediate gains from search behavior in the short run. Younger workers benefit relatively more from the positive effects of jobto-job changes, as expected. We also show that transitions are relatively higher within the informal sector for most countries, and particularly so for workers without college education. Moreover, total job separations and transitions from formal into informal employment occur more often among low-skill and young individuals. Next, the paper analyzes wage growth by percentiles for all workers and job-to-job movers for each country over a more extended period. We find that jobto-job changes are inequality-reducing in the short run, consistent with search gains associated with turnover exhausting more rapidly for high-paid workers. In contrast, we find that human capital effects dominate the search effects in the long run, as human capital accumulates over time. Thus, long-run wage growth is lower for job changers than for stayers, so that, while in the short run the search effects tend to dominate those of human capital, in the long run the opposite occurs. As unskilled workers change jobs more frequently, this suggests that job changes are inequalityincreasing in the long run. A potential explanation for limited wage growth in Latin American economies may include high informality rates. Policies to reduce wage inequality should focus on improving the conditions for positive turnover towards better investment and, thus, higher-quality jobs.
Inequality of opportunity and intergenerational persistence in Latin America
How strong is the transmission of socio-economic status across generations in Latin America? To answer this question, we first review the empirical literature on intergenerational mobility and inequality of opportunity for the region, summarizing results for both income and educational outcomes. We find that, whereas the income mobility literature is hampered by a paucity of representative datasets containing linked information on parents and children, the inequality of opportunity approach – which relies on other inherited and pre-determined circumstance variables – has suffered from arbitrariness in the choice of population partitions. Two new data-driven approaches – one aligned with the ex-ante and the other with the ex-post conception of inequality of opportunity – are introduced to address this shortcoming. They yield a set of new inequality of opportunity estimates for twenty-seven surveys covering nine Latin American countries over various years between 2000 and 2015. In most cases, more than half of the current generation’s inequality is inherited from the past – with a range between 44% and 63%. We argue that on balance, given the parsimony of the population partitions, these are still likely to be underestimates.
Family Change in Latin America: Schooling and Labor Market Implications for Children and Women
This chapter provides an account of the major family transformations that occurred in recent decades across Latin American and Caribbean countries and examines the implications of such transformations for children’s school attendance and progress and women’s labor force participation. Latin American and Caribbean families and households have undergone substantial changes in recent years while keeping some of their distinctive features unchanged (Esteve et al., 2022; Esteve & Florez-Paredes, 2018a; Juárez & Gayet, 2014). This combination of stability and change has had profound transformations in the family status in which women raise their children and the family context in which children are raised. We refer to family context as the combination of women`s marital status and the type of households in which children reside. We combine references to the literature and own calculations based on Latin American and Caribbean population census samples, available at the Integrated Public-use Microdata Series International (IPUMS) (Minnesota Population Center, 2020). We use data from 25 countries based on the most recent census microdata and, in some instances, historical samples starting in the late 1950s (see Appendix 1).
Inherited inequality: a general framework and an application to South Africa
Scholars have sought to quantify the extent of inequality which is inherited from past generations in many different ways, including a large body of work on intergenerational mobility and inequality of opportunity. This paper makes three contributions to that broad literature. First, we show that many of the most prominent approaches to measuring mobility or inequality of opportunity fit within a general framework which involves, as a first step, a calculation of the extent to which inherited circumstances can predict current incomes. The importance of prediction has led to recent applications of machine learning tools to solve the model selection challenge in the presence of competing upward and downward biases. Our second contribution is to apply transformation trees to the computation of inequality of opportunity. Because the algorithm is built on a likelihood maximization that involves splitting the sample into groups with the most salient differences between their conditional cumulative distributions, it is particularly well-suited to measuring ex-post inequality of opportunity, following Roemer (1998). Our third contribution is to apply the method to data from South Africa, arguably the world’s most unequal country, and find that almost threequarters of its current inequality is inherited from predetermined circumstances, with race playing the largest role, but parental background also making an important contribution.
Assessing the effectiveness of social protection measures in mitigating COVID-19-related income shocks in the European Union
By means of counterfactual simulation methods, this paper quantifies the role of tax– benefit policies in mitigating the shock of the COVID-19 pandemic to household income in the European Union. The tax-benefit microsimulation model for the European Union EUROMOD is used to decompose changes in the income distribution into the effects of: (i) earnings losses due to COVID-19, (ii) automatic stabilizers, (iii) monetary compensation schemes introduced during the pandemic; and (iv) COVID-19-specific reforms to taxes and benefits implemented by European Union governments. The results show a great deal of heterogeneity between countries in terms of earnings losses and the effect of tax-benefit policies during the COVID-19 pandemic. In most countries, the largest contribution to cushioning the economic shock of the pandemic comes from monetary compensation schemes. Automatic stabilizers also play a role, mainly through the effects of social insurance contributions, taxes, and unemployment insurance benefits. Tax-benefit systems cushioned incomes to a large extent even among those most severely affected by the shock to earnings, with an important role for monetary compensation schemes, but also a larger stabilizing effect of unemployment insurance. Among automatic stabilizers, social assistance benefits played an important role in cushioning the income shock for the poorest quintiles among the most severely affected, but only in selected countries.
Farm size and income distribution of Latin American agriculture: new perspectives on an old issue
Latin American and Caribbean countries have historically been known for their rates of land inequality, highest in the world. However, these countries also exhibit a high degree of heterogeneity in their patterns of land concentration and average farm sizes. These cross-country differences play a determining role in productivity of farms and the distribution of agricultural income. Constructing a new data-set matching agricultural census and household survey data, we provide suggestive evidence on the positive relationship between farm size and farm income and wages. We identify the prevalence of small farms and the resulting low agricultural incomes as an important mechanism contributing to high income inequality in agricultural regions. Low labor productivity in small farms appears as a key explanatory factor.
Does hotter temperature increase poverty and inequality? Global evidence from subnational data analysis
Despite a vast literature documenting the harmful effects of climate change on various socioeconomic outcomes, little evidence exists on the global impacts of hotter temperature on poverty and inequality. Analysis of a new global panel dataset of subnational poverty in 134 countries finds that a one-degree Celsius increase in temperature leads to a 9.1 percent increase in poverty, using the US$1.90 daily poverty threshold. A similar increase in temperature causes a 1.4 percent increase in the Gini inequality index. The paper also finds negative effects of colder temperature on poverty and inequality. Yet, while poorer countries—particularly those in South Asia and Sub-Saharan Africa—are more affected by climate change, household adaptation could have mitigated some adverse effects in the long run. The findings provide relevant and timely inputs for the global fight against climate change as well as the current policy debate on the responsibilities of richer countries versus poorer countries.
The transformative effects of tacit technological knowledge
Tacit knowledge – ideas that cannot readily be meaningfully and completely communicated – has long been considered a precursor to scientific and technological advances. Using words and phrases found in the universe of USPTO patents 1940-2020, we propose a new method of measuring tacit knowledge and its progressive codification. We uncover a discontinuity in the production of highly tacit technologies. Before 1980, highly- and less-tacit inventions are evenly distributed among inventors, organizations, scientific domains and subnational regions. After 1980, inventors of highly tacit patents become relatively rare, and increasingly concentrated in domains and locations. The economic payoffs to tacit knowledge also change, as it starts unequally rewarding high-income workers. This suggests a role for tacit knowledge in contributing to the rise in income inequality since 1980.
Catch me if you can: gaps in the register of overseas entities
The Register of Overseas Entities (ROE) was introduced by the government in Spring 2022 with the commitment that it would “require anonymous foreign owners of UK property to reveal their real identities”. This report uses data released by Companies House and HM Land Registry to assess to what extent the ROE is currently delivering on this aim. It identifies and quantifies several major ‘gaps’ in the scope and operation of the register and make recommendations for how the register could be improved.
Is there a 'new consensus' on inequality?
Thirty years after the “Washington Consensus”, is there a new policy consensus that addresses the problem of inequality? This paper argues that there is widespread acceptance that multiple, interrelated and mutually reinforcing inequalities exist – in income, wealth, education, health, power, and recognition – and that these inequalities are generally “too high”. There has also been a significant shift towards a shared view that these inequalities matter, both intrinsically and because of their instrumental effects on economic efficiency and political institutions. There is much less consensus, perhaps surprisingly, on what the actual levels of income inequality are, and there are common misperceptions about their trends. In policy terms, there is something approaching a consensus regarding the desirability of various “pre-distribution” policies, ranging from early childhood development to investment in better teaching. In certain quarters, there is also agreement that sharper antitrust regulation, freer labor unions, and more progressive taxation is needed in most countries. But much less is known about how to provide the poor with genuine opportunities to break the cycle of intergenerational transmission of disadvantage in a durable way.
Multidimensional tool for assessment of social protection framework - a life cycle approach: conceptualisation, construction and comparison
With the objective of introducing a holistic approach for review and assessment of social protection framework, the Multidimensional Social Protection Index (MSPI) is conceptualised in this paper. While developing the proposed MSPI ‘human life cycle’ has been kept at the centre. Accordingly, three sub-indices representing different life phases namely Young Social Protection Index (YSPI), Adult Social Protection Index (ASPI) and Elderly Social Protection Index (ESPI) are constituted. For ascertaining these sub-indices, social protection programs covering important areas like livelihood, education and health are evaluated by assessing their three dimensions viz. adequacy, coverage and efficacy. For this purpose, a set of indicators are framed. A detailed stepwise methodology for construction of MSPI is presented herein. The study is extended to compute MSPI for Indian states on the basis of selected social protection programs to gauge its practical applicability.
GEOWEALTH: spatial wealth inequality data for the United States, 1960-2020
Wealth inequality has been sharply rising in the United States and across many other high-income countries. Due to a lack of data, we know little about how this trend has unfolded across locations within countries. Investigating this subnational geography of wealth is crucial, as from one generation to the next, wealth powerfully shapes opportunity and disadvantage across individuals and communities. Using machine-learning-based imputation to link newly assembled national historical surveys conducted by the U.S. Federal Reserve to population survey microdata, the data presented in this paper addresses this gap. The Geographic Wealth Inequality Database (“GEOWEALTH”) provides the first estimates of the level and distribution of wealth at various geographical scales within the United States from 1960 to 2020. The GEOWEALTH database enables new lines of investigation into the contribution of spatial wealth disparities to major societal challenges including wealth concentration, spatial income inequality, social mobility, housing unaffordability, and political polarization.
Spatial wage inequality in North America and Western Europe: changes between and within local labour markets 1975-2019
The rise of economic inequalities in advanced economies has been often linked with the growth of spatial inequalities within countries, yet there is limited comparative research that studies the relationship between national and subnational economic inequality. This paper presents the first systematic attempt to create internationally comparable evidence showing how different countries perform in terms of geographic wage inequalities. We create cross-country comparable measures of spatial wage disparities between and within similarly-defined local labour market areas (LLMAs) for Canada, France, (West) Germany, the UK and the US since the 1970s, and assess their contribution to national inequality. By the end of the 2010s, spatial inequalities in LLMA mean wages are similar in Canada, France, Germany and the UK; the US exhibits the highest degree of spatial inequality. Over the study period, spatial inequalities have nearly doubled in all countries, except for France where spatial inequalities have fallen back to 1970s levels. Due to a concomitant increase in within-place inequality, the contribution of places in explaining national wage inequality has remained fairly constant over the 40-year study period, except in the UK where we document a significant increase.
The scale and drivers of ethnic wealth gaps across the wealth distribution in the UK: evidence from Understanding Society
Using data from Understanding Society, this paper investigates for the first time the scale and the drivers of ethnic disparities in wealth across the net worth distribution (until recently assessed at the mean or the median). The analysis reveals that apart from people in the Indian ethnic group, all other ethnic minority groups have substantially less net worth than the White British group across the distribution and are less likely to hold high-return assets and more likely to hold financial debt. The picture in terms of housing wealth is similar: the Indian ethnic group comes out as the group with the higher housing wealth than any other ethnic group. By contrast, in terms of net financial wealth all ethnic minority groups including the Indian ethnic group have substantially less wealth (including very high levels of indebtedness) than the White British group. The wealth disadvantage of ethnic minority groups with lower net worth holdings relative to the White British group, is reduced but remains substantial across the distribution, even after accounting for differences in observable characteristics.
Social inequality and data sciences: the case of Germany
No doubt, the Covid-19 pandemic reminded us how much modern societies depend on the provision of scientific data — not just for the healthcare system but for all areas of public policy-making. We witnessed how difficult it was for decision-makers across the globe to make uncertain decisions without sufficient evidence. As frequently noted, the lack of scientific data was particularly a problem for the most disadvantaged members of our societies. As a recent EU report (EU 2021:11) concluded: "The Covid-19 pandemic has shown a significant impact on equality all over the globe: those already most at risk of discrimination and inequality (people with protected categories such as older people, persons with disabilities, members of ethnic minorities) were and are at far greater risk of falling ill or dying from the virus. Yet, in most EU countries, officially available health statistics on Covid-19 could not be (fully) disaggregated, in particular by racial or ethnic origin. This had a detrimental effect on the effectiveness of protective measures to curb the spread of the virus".
Origins of Latin American Inequality
How deep are the roots of Latin America’s economic inequalities? In this chapter we survey both the history and the literature about the region’s extreme economic disparities, focusing on the most recent academic contributions. We begin by documenting the broad patterns of national and sub-national differences in income and inequality, building on the seminal contributions of Engerman and Sokoloff (2000; 2002, 2005) and aiming to capture different dimensions of inequality. We then proceed thematically, providing empirical evidence and summarizing the key recent studies on colonial institutions, slavery, land reform, education and the role of elites. Finally, we conduct a “replication” exercise with some seminal papers in the literature, extending their economic results to include different measures of inequality as outcomes.
Masculinities & paid domestic-care labour in India
This article focuses on male domestic-care workers (MDCWs) in India. It explores how constructed notions of masculinity interplay with labour market structures, enable forms of labour discipline and shape labour subjectivities. The article details performative and embodied gendered practices engaged in by MDCWs, illuminates the interplay of spatial and temporal aspects of paid domestic-care work with gendered skill sets and labour roles, and connects the differentiated masculinities performed by MDCWs to the broader political economy of domestic-care labour. It also highlights how MDCWs utilise their gender to express degrees of agency vis-à-vis employers and others. The article argues that MDCWs perform masculinities in variegated ways in the face of stigma, marginalisation, and relations of servitude. These performances are not devoid of agency, but are commoditised within the political economy of the domesticcare sector and are framed within patriarchal gender norms as ‘protective care’ or as work requiring other masculine attributes.
Minimum wage policy and inequality in Latin America and the Caribbean
In this chapter we review the literature and inform policy debates about the effects of minimum wages (MW) on income inequality in Latin America and the Caribbean (LAC). Earnings are the primary source of income among families, especially in the lower part of the earnings and household income distribution. It is reasonable, therefore, to expect increases in the minimum wage to have a significant impact on earnings and income inequality.
Globalisation and inequality in Latin AmericaWe survey the recent literature studying the effects of globalization on inequality in Latin America. Our focus is on research emerging from the late 2000s onward, with an emphasis on empirical work considering new mechanisms, studying new dimensions of inequality, and developing new methodologies to capture the many facets of globalization’s relationship to inequality. After summarizing both design-based and quantitative work in this area, we propose directions for future work. Our overarching recommendation is that researchers develop unifying frameworks to help synthesize the results of individual studies that focus on distinct aspects of globalization’s relationship to inequality.
Wealth inequality in Latin America
How has wealth accumulated in the region and how is it distributed across households? Despite being widely recognized for its extreme income inequality, reliable data on wealth is scarce, partial and oftentimes contradictory, making it difficult to answer these basic questions. In this study, we estimate aggregates based on macroeconomic data, and inequality based on recently available surveys. We contrast our results with the literature, with a handful of state-of-the-art estimates from administrative sources, and with more available but extrapolated estimates from Credit Suisse and wid.world. Considering all the evidence, we distinguish reliable facts from what can only be conjectured or speculated. We find that aggregate wealth increased over two decades in four countries, now ranging close to 3.5 the national income for market value estimates and 5-6 times at book values. We also find that wealth inequality is amongst the highest in the world were it can be measured. Given data limitations, one can only speculate about aggregates in opaque countries and about inequality trends in any country in the region. Although recent research in the developed world has focused in combining data sources to better understand wealth, the region lags behind and urgently requires more and better public information.
(Mis-)perceptions, information, and political polarization
Voters hold widespread misperceptions about society, which have been documented in numerous studies. Likewise, voters demonstrate increasing political polarization over policy preferences. Against this backdrop, it is intuitively appealing to think that information provision can help correct misperceptions and create common ground by enhancing the political conversation and bridging political divisiveness. We show, using a general population survey in the United States, that beliefs in the power of information to reduce polarization are indeed widespread. Additionally, we review the extensive literature on misperceptions. Our review shows that existing misperceptions often, but not always, appear to be associated with an increased sense of divisiveness in society; however, information provision is more likely to increase polarization than decrease it. The reason is that different societal groups exhibit differing reactions to truthful and accurate information, in ways that often strengthens, rather than mitigates, existing preference schisms. Thus, the intuitively appealing suggestion that information provision can serve as a powerful tool to reduce polarization is often proven false.
Great or grim? Disagreement about Brexit, economic expectations and household spending
Does political polarization influence economic expectations and behaviour? Utilizing British household surveys and administrative data, we find a strong polarization of economic expectations and behaviour between pro- and anti-Brexit supporters after the once-in-a-lifetime EU Referendum. We show that the Brexit vote led to a large and long-lasting divergence between Leavers and Remainers in their assessment of the general economic situation, personal circumstances, and spending intentions. Furthermore, on average, a 10% difference in the share of leave voters across local authorities is respectively associated with a 5.98% and 0.78% increase in the gap in the per capita housing transaction volume and licensed automobile stock after the referendum.
The concentration of personal wealth in Italy 1995–2016
Italy is one the countries with the highest wealth-to-income ratio in the developed world, but knowledge about the size distribution of wealth is currently limited. In this paper we estimate the distribution of personal wealth between 1995 and 2016, using the full records of inheritance tax files, combined with surveys and national accounts. Unlike available statistics from household surveys, our estimates point to a sharp inversion of fortunes between the top and the bottom of the wealth distribution since the mid-1990s. Whereas the level of wealth concentration in Italy is in line with other European countries, its time trend appears more in line with the U.S. Moreover, Italy stands out as one of the countries with the strongest decline in the wealth share of the bottom 50% of the population. The paper also sheds new light on the determinants of the observed inequality trends.
Income inequality and campaign contributions: evidence from the Reagan tax cut
What is the relationship between economic and political inequality? Campaign contributions are often mentioned among the possible channels for richer people to exert disproportionate influence on policymakers. At the same time, by exacerbating economic disparities, public policies that favour the wealthy might also give them a greater relative weight in the donor pool. We study the effect of the 1986 Tax Reform Act, a remarkable tax cut that, following the prevailing doctrine about optimal income taxation at the time, decreased the marginal tax rates disproportionately at the top of the income distribution. Using data at the census tract level, we show that this policy decision caused a spike in contributions to both parties from the groups of citizens that benefited the most from it, namely the top ten percent of the income distribution. Our conclusion is that the erosion of tax progressivity has contributed to rise the political clout of wealthy individuals, via campaign donations, and that the Tax Reform Act, a landmark policy of the second Reagan administration, has been a crucial step in the spiral between economic inequality and uneven political influence of the last four decades.
It’s a two-way thing: symbolic boundaries and convivial practices in changing neighbourhoods in London and Tshwane
While there is a considerable body of literature on symbolic boundaries that engages with longestablished/newcomer configurations, work on conviviality has only rarely taken this angle, despite its general focus on contexts of immigration-related diversity. This article connects these literatures by examining insideroutsider configurations between long-established residents and newcomers in two very different contexts of rapid demographic change, where the established population is already marginalised and feels further threatened by newcomers. Drawing on ethnographic research in Newham, United Kingdom, and Mshongo, South Africa, we advance debates on conviviality by revealing how perceptions of inequality, lack of civility, and lack of reciprocity shape symbolic boundaries against newcomers, which may in turn be softened by convivial practices. We also consider what the differences between the sites might reveal about the enabling conditions for conviviality in such neighbourhoods.
Heterogeneity in macroeconomics: the compositional inequality perspective
This work presents a framework to jointly study individuals’ heterogeneity in terms of their capital and labor endowments (endowment heterogeneity) and of their saving and consumption behaviors (behavioral heterogeneity), from an empirical perspective. By adopting a newly developed synthetic measure of compositional inequality, this work classifies more than 20 economies across over two decades on the basis of their heterogeneity characteristics. Modern economies are far from being characterized by agents with same propensities to save and consume and same endowments (Representative Agent systems), or by the existence of rich capital-abundant savers and poor hand-to-mouth consumers (Kaldorian systems). Our framework and results are discussed in light of the heterogeneity assumptions underlying several types of macroeconomic models with heterogeneous agents (Kaldorian, TANK & HANK, OLG, and ABM models). A negative relationship between behavioral heterogeneity and the economy’s saving rate is also documented.
Criminal justice and social (in)justice
The obstacles to achieving criminal justice in a society marked by structural injustice have long been recognised. Inequalities in social attitudes to certain groups and in the distribution of resources and opportunities in fields ranging from family life, education, health, shelter and employment are most obviously relevant, while the experience of abuse, prejudice or nutritional or emotional deprivation affects both life opportunities and psychological development. The threat to the legitimacy of punishment is particularly acute when the state itself bears responsibility for creating, or failing to alleviate, the relevant conditions. Doing criminal justice remains important, however, because disproportionalities in the impact of criminalisation and punishment on groups disadvantaged by injustice are matched by comparable disproportionalities in criminal victimisation. This challenge has been exacerbated by the growth and embedding of economic inequalities. This paper considers the implications for criminal justice systems, and for the re-emergence of new forms of criminal justice abolitionism.
The analysis of inequality in the Bretton Woods institutions
This paper assesses the evolution of thinking, analysis, and discourse about inequality in the World Bank and the International Monetary Fund since their inception in 1944, based on bibliometric analysis, a reading of the literature, and personal experience. Whereas the Fund was largely unconcerned with economic inequality until the 2000s but has shown a rapidly growing interest since then, the Bank’s approach has been characterized by ebbs and flows. The degree of interest in inequality in the two institutions appears to be largely determined by the prevailing intellectual profile of the topic in academic research, particularly in economics, and by ideological shifts in major shareholder countries. Looking ahead, Bank and Fund researchers continue to have an important role to play, despite a much more crowded field in inequality research. I suggest that this role involves holding firm to an emphasis on inequality “at the bottom” and highlight four themes that may deserve special attention.
Estimating Inequality with Missing Incomes
The measurement of income inequality is affected by missing observations, especially if they are concentrated on the tails of an income distribution. This paper conducts an experiment to test how the different correction methods proposed by the statistical, econometric and machine learning literature address measurement biases of inequality due to item non-response. We take a baseline survey and artificially corrupt the data employing several alternative non-linear functions that simulate patterns of income nonresponse and show how biased inequality statistics can be when item non-responses are ignored. The comparative assessment of correction methods indicates that most methods can partially correct for missing data biases. Sample reweighting based on probabilities on non-response produces inequality estimates quite close to true values in most simulated missing data patterns. Matching and Pareto corrections can also be effective to correct for selected missing data patterns. Other methods, such as Single and Multiple imputations and Machine Learning methods are less effective. A final discussion provides some elements to explain these findings.
Political Implications of ‘Green’ Infrastructure in One’s ‘Backyard’: The Green Party's Catch-22?
A clean environment is a public good, with the benefits shared by all. While most individuals can agree on the need to implement green policies, we argue that the cost-benefit calculation is quite different depending on where one lives. We test how the building of wind turbines and solar farms changes one’s political preferences in the German state of Baden-Württemberg. We use a difference-in-difference design based on whether one’s area is designated for potential infrastructure in the future. We show that when the burden of ‘green’ infrastructure falls on voters, wind turbines or solar farms in one’s ‘backyard’, these local authorities vote less for the Green Party. Additionally, using individual level data from SOEP, we find that it is those individuals who previously voted Green who are the most likely to desert their party in the face of green infrastructure, rather than disincentivising potential ‘switchers’.
Level best? The levelling up agenda and UK regional inequality
‘Levelling up’ - a policy agenda focused on reducing regional inequalities - has become the new mantra in British politics. This paper reviews and critiques the agenda from its beginnings in 2019 to the publication of the 2022 Levelling Up White Paper. The agenda is an overdue recognition of gross regional inequality, and the new ‘missions’ which are set out to drive change are welcome. Yet local institutions lack capacity to deliver, there has been little genuine devolution, and the mechanisms through which the ‘missions’ will actually be delivered are unclear. Our analysis of spending commitments shows little new money has been committed, and what has been committed has tended to be through top-down competitive bids. There is a danger that levelling up becomes the latest in a list of politically useful but empty slogans which are used as a substitute for resources and devolution.Download paper
The UK’s Global Economic Elite: a sociological analysis using tax data
In this paper we show the importance of international ties amongst the UK’s global economic elite, by exploiting administrative data derived from tax records. We show how this data can be used to shed light on the kind of transnational dynamics which have long been hypothesised to be of major significance in the UK, but which have previously proved intractable to systematic study. Our work reveals the enduring and distinctive influence of long-term imperial forces, especially to the former ‘white settler’ ex-dominions which have been called the ‘anglosphere’. These are allied to more recent currents associated with European integration and the rise of Asian economic power. Here there are especially strong ties to the ‘old EU-6’ nations of France, Germany, Netherlands, Belgium, Luxembourg, and Italy. The incredible detail and universal coverage of our data means that we can study those at the very top with a level of granularity that would be impossible using traditional survey sources. We find compelling support for the public perception that non-doms are disproportionately highly affluent individuals who can be viewed as a part of a global elite. However, whilst there is some evidence for the stereotype of the global wealthy parking themselves in the UK, this underplays the significance of the working rich. Our analysis also reveals the remarkable concentration of non-doms in central areas of London.
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A Micro Perspective on r > g
By exploiting large-scale administrative data on estimated gross and net personal wealth in Norway from 2010 to 2018, this paper establishes the first microlevel analysis of the difference between the real return on wealth and the real growth rate of total pretax income across the entire net wealth distribution. We show that for the top 40% of the distribution, aggregate R − G underestimates its micro counterpart r − g, while the opposite happens for the bottom 60%, indicating that micro r−g qualifies as a more precise measure to analyze the dynamics of income and wealth inequality thoroughly.
Global Distributions of Capital and Labor Incomes: capitalization of the global middle class
This article studies the global distributions of capital and labor incomes among individuals in 2000 and 2016. By constructing a novel database covering approximately the 80% of the global output and the 60% of the world population, two major findings stand out. First, the world underwent an important process of capitalization. The share of world individuals with positive capital income rose from 20% to 32%. Second, the global middle class benefited the most, in relative terms, from such capitalization process, and China is the main responsible of this global trend. The findings of this paper are robust to changes in the income definition, and top-income adjustments. The global composition of capital and labor incomes is, therefore, more equal today than it was twenty years ago.
The long shadow of local decline: birthplace economic conditions, political attitudes, and long-term individual economic outcomes in the UK
Does growing up in a high-unemployment area matter for individual economic and political outcomes? Despite a significant focus upon the links between place of residence, life outcomes and political attitudes of individuals, there is less evidence on how local economic conditions at birth shape individual wages and political attitudes over the longterm. This paper links the British Household Panel Survey (BHPS) micro data from English and Welsh respondents with historic localised information on unemployment. Our results, which control for composition effects, family background, and sorting of people across places, show that being born into a high-unemployment Local Authority has a significant, long-term impact on individual’s economic outcomes, decreasing earnings in adulthood. Even accounting for individual economic outcomes, being born into a local authority of high unemployment makes individuals more economically left-wing, with a greater belief in an obligation for the government to provide jobs, but also less culturally tolerant. These results contribute to the debate on the nature and rationales of placebased policy solutions.
Intergenerational social mobility and anti-system support: the journey matters
Seminal sociological works propose that a high level of social mobility within a society underpins democracy. The salience of this relationship is particularly poignant in contemporary politics. Fewer individuals are upwardly mobile and more downwardly mobile than in previous generations. There is now also a political outlet for dissatisfied voters, anti-system parties. I analyse the European Social Survey with diagonal reference models, which separate origin and destination effects from mobility effects. My findings show that one’s origins, measured by parental educational attainment, are an important predictor of anti-system right support. Mobile individuals with lower educated parents are more likely to vote for the anti-system right than their immobile counterparts. There is an additional mobility effect, upward social mobility reduces support for the anti-system right whereas downward mobility increases support. Contrastingly, anti-system left support derives from a wider cross-section of society, and there is no evidence that parental origin or social mobility is statistically significant. Finally, I show that origin effects are consistent across Western European countries.
Progressive Cities: Urban-rural polarisation of social values and economic development around the world
In contrast to the conservative values of rural populations, cities are often seen as bulwarks of liberal, progressive values. This urban-rural divide in values has become one of the major fault lines in western democracies, underpinning major political events of the last decade, not least the election of Donald Trump. Yet, beyond a small number of countries, there is little evidence that cities really are more liberal than rural areas. Evolutionary modernisation theory suggests that socio-economic development may lead to the spread of, progressive, self-expression values but provides little guidance on the role of cities in this process. Has an urban-rural split in values developed across the world? And does this gap depend on the economic development of a country? We answer these questions using a large cross-sectional dataset covering 66 countries. We show that there are marked and significant urban-rural differences in progressive values, defined as attitudes to immigration, gender rights, and family life. These differences exist even when controlling for observable compositional effects, suggesting that cities do play a role in the spread of progressive values. Yet, these results only apply at higher levels of economic development suggesting that, for cities to leave behind rural areas in terms of liberal values, the satisfying of certain material needs is a prerequisite.
Model-based Recursive Partitioning to Estimate Unfair Health Inequalities in the United Kingdom Household Longitudinal Study
We measure unfair health inequality in the UK using a novel data- driven empirical approach. We explain health variability as the result of circumstances beyond individual control and health-related behaviours. We do this using model-based recursive partitioning, a supervised machine learning algorithm. Unlike usual tree-based algorithms, model-based recursive partitioning does identify social groups with different expected levels of health but also unveils the heterogeneity of the relationship linking behaviors and health outcomes across groups. The empirical application is conducted using the UK Household Longitudinal Study. We show that unfair inequality is a substantial fraction of the total explained health variability. This finding holds no matter which exact definition of fairness is adopted: using both the fairness gap and direct unfairness measures, each evaluated at different reference values for circumstances or effort.
Redistributive effect and the progressivity of taxes and benefits: evidence for the UK, 1977–2018
We apply the Kakwani approach to decomposing redistributive effect into average rate, progressivity, and reranking components using yearly UK data covering 1977–2018. We examine cash and in-kind benefits, and direct and indirect taxes. In addition, we highlight an empirical implementation issue – the definition of the reference (‘pre-fisc’) distribution. Drawing on an innovative counterfactual approach, our empirical analysis shows that trends in the redistributive effect of cash benefits are largely associated with cyclical changes in average benefit rates. In contrast, trends in the redistributive effects of direct and indirect taxes are mostly associated with changes in progressivity. For in-kind benefits, changes in the average benefit rate and progressivity each played the major roles at different times.
The Many Faces of Health Justice
This paper develops the idea of health justice as a plural conception. It draws on the literature on justice from philosophy and economics, and investigates its application and reach in the space of health. Several distinctions are invoked in identifying and contrasting different facets of health justice and injustice. These include active versus passive injustice; process fairness versus substantive justice; comparative versus non-comparative justice; compensatory and distributive justice. Within distributive justice, the health implications of alternate principles – viz. equality, priority, sufficiency, and efficiency – are examined and evaluated. Many faces of health justice are thus exposed which help to address the varieties of injustice observed in the health sphere.
A Multidimensional Approach to Measuring Economic Insecurity: the case of Chile
This paper proposes a strategy to measure economic insecurity in countries in the Global South. It builds a 'Multidimensional Economic Insecurity Index' (MEII) that combines four indicators of economic vulnerability that cause stress and anxiety: unexpected economic shocks, unprotected employment or non-workers in the household, over-indebtedness and asset poverty. The index offers a measure that directly relates economic uncertainty to stress and anxiety due to the lack of protection and buffers to face an unexpected economic shock. The MEII is applied to Chile using Survey of Household Finances (SHF) cross-sectional data (2007, 2011, 2014 and 2017). The results show that i) about half of the Chilean households experienced, on average, two or more economic vulnerabilities during the last decade with an intensity of 2.3 vulnerabilities, and ii) economic insecurity affects households on the entire income distribution, even in the highest income deciles groups. By identifying the groups of households most affected by economic insecurity and its trend in recent years, applying the MEII in countries such as Chile provides relevant information to monitor, evaluate and improve social safety nets besides labour market regulations.
Rising Top-Income Persistence in Australia: evidence from income tax data
We use a new Australian longitudinal income tax dataset, Alife, covering 1991–2017, to examine levels and trends in the persistence in top-income group membership, focussing on the top 1%. We summarize persistence in multiple ways, documenting levels and trends in rates of remaining in top-income groups; re-entry to the top; the income changes associated with top-income transitions; and we also compare top-income persistence rates for annual and ‘permanent’ incomes. Regardless of the perspective taken, top-income persistence increased markedly over the period, with most of the increase occurring in the mid-2000s and early 2010s. In the mid- to late2010s, Australian top-income persistence rates appear to have been near the top of the range of tax-data estimates for other countries. Using univariate breakdowns and multivariate regression, we show that the rise in top-income persistence in Australia was experienced by many population subgroups.
Faces of Inequality: a mixed methods approach to multidimensional inequalities
This paper presents a new mixed methods approach to measuring and understanding multidimensional inequalities, and applies it to new data for Mexico City. We incorporate quantitative and qualitative dimensions of inequality, integrating the concerns of both economists and sociologists. The method combines standard quantitative income gradients with two new ways of conceptualizing qualitative inequalities that relate to lived experiences, all based on the same underlying income distribution. First, we introduce the method of qualitative income gradients, or what we call inequalities of lived experience. These compare qualitative experiences in fields such as work, or health and education services, across the entire income distribution. Second, we describe lived experiences of inequality, which are experiences of social hierarchy, stigma, or domination, including those associated with categorical inequalities of gender or race. This portrayal of inequality combines the representativeness of quantitative approaches with the depth and nuance of qualitative analyses of lived experience and social relations.
Social Mobility and Political Regimes: Intergenerational Mobility in Hungary,1949-2017
This paper measures social mobility rates in Hungary 1949-2017, for upper class and underclass families, using surnames to measure social status. In these years there were two very different social regimes. The first was the Hungarian People’s Republic, 1949-1989, a Communist regime with an avowed aim of favouring the working class. Then the modern liberal democracy, 1989-2020, a free-market economy. We find five surprising things. First, social mobility rates were low for both upper- and lower-class families 1949- 2017, with an underlying intergenerational status correlation of 0.6-0.8. Second, social mobility rates under communism were the same as in the subsequent capitalist regime. Third, the Romani minority throughout both periods showed even lower social mobility rates. Fourth, the descendants of the noble class in Hungary in the eighteenth century were still significantly privileged in 1949 and later. And fifth, while social mobility rates did not change measurably during the transition, the composition of the political elite changed fast and sharply.
Poverty traps and affluence shields: modelling the persistence of income position in Chile
The author proposes analysing the dynamics of income positions using dynamic panel ordered probit models. He disentangles, simultaneously, the roles of state dependence and heterogeneity (observed and non-observed) in explaining income position persistence, such as poverty persistence and affluence persistence. He applies this approach to Chile exploiting longitudinal data from the P-CASEN 2006–2009. First, he finds that income position mobility at the bottom and the top of the income distribution is much higher than the expected, showing signs of high economic insecurity. Second, the observable individual characteristics have a much stronger impact than true state dependence to explain individuals’ current income position in the income distribution extremes.
Death and destitution: distribution of welfare losses from the Covid-19 pandemic
The Covid-19 pandemic has brought about massive declines in wellbeing around the world. This paper seeks to quantify and compare two important components of those losses – increased mortality and higher poverty – using years of human life as a common metric. We estimate that almost 20 million life-years were lost to Covid-19 by December 2020. Over the same period and by the most conservative definition, over 120 million additional years were spent in poverty because of the pandemic. The mortality burden, whether estimated in lives or in years of life lost, increases sharply with GDP per capita. The poverty burden, on the contrary, declines with per capita national incomes when a constant absolute poverty line is used, or is uncorrelated with national incomes when a more relative approach is taken to poverty lines. In both cases the poverty burden of the pandemic, relative to the mortality burden, is much higher for poor countries. The distribution of aggregate welfare losses – combining mortality and poverty and expressed in terms of life-years – depends both on the choice of poverty line(s) and on the relative weights placed on mortality and poverty. With a constant absolute poverty line and a relatively low welfare weight on mortality, poorer countries are found to bear a greater welfare loss from the pandemic. When poverty lines are set differently for poor, middle and high-income countries and/or a greater welfare weight is placed on mortality, uppermiddle and rich countries suffer the most.
Faith No More? The divergence of political trust between urban and rural Europe
Events such as Brexit and the Gilet Jaunes protests have highlighted the spatial nature of populism. In particular, there has been increasing political divergence between urban and rural areas, with rural areas apparently having lost faith in national governments. We investigate this divergence using data on over 125,000 EU citizens from the European Social Survey from 2008-2018. We show that people in rural areas have lower political trust than urban or peri-urban residents, with this difference clear for six different forms of political institutions, including politicians, political parties, and national parliaments. There has been divergence of political trust between urban and rural Europe since 2008, although this is primarily driven by Southern Europe. While these results can partly be explained by demographic differences between cities and the countryside, divergent economic experiences, differences in values, and perceptions that public services are less effective outside of urban areas, there is a residual ‘rural effect’ beyond this. We argue that the polarization of urban-rural political trust has important implications for the functioning of European democracies.
Understanding Changes in the Geography of Opportunity Over Time: the case of Santiago, Chile
The geography of opportunity research has made significant progress in recent years. The use of composite indexes aimed at capturing the attributes of different urban areas has been particularly useful to deepen the understanding of the role that the urban context plays in people’s life chances. However, little attention has been paid to the dynamic component of the geography of opportunity, that is, what explains its changes over time and whether or not those changes (positive or negative) are substantial. The contribution of this work is that it offers a methodology (a conceptual framework, a composite geography of opportunity index and relative and absolute measures) that provides a holistic and in-depth approach to analyse not only the set of opportunities available in the different urban areas but also their change over time (how they change, the depth of those changes and the forces explaining it). The information generated through this approach has the advantage of better informing place-based policy interventions since it offers not only a clear classification of areas but also a useful method for comparing and monitoring the changes in the geography of opportunity over time.
Mapping Systemic Approaches to Understanding Inequality and Their Potential for Designing and Implementing Interventions to Reduce Inequality
Inequality has become a pressing issue across the world and a growing focus of the work of many experts and organisations. Multilateral institutions, nongovernmental organizations, government agencies, development agencies as well philanthropic organizations are among those who have developed, or are in the process of developing, programmes to understand and address inequalities. This focus has grown out of evidence that economic inequality is high or rising in many countries across the world and that inequality is harmful for economic growth and has negative effects on individuals and society more broadly.
Regional Inequality in Multidimensional Quality of Employment (QoE): insights from Chile, 1996-2017
This paper uses a multi-dimensional methodology for measuring the quality of employment (QoE) across Chile's regions using household survey data from 1996 – 2017. The paper shows how much a regional perspective can add to an analysis of the QoE and how it can inform policy makers in a way that goes beyond traditional variables such as participation or unemployment rates, which are not always good indicators of labour market performance in developing countries with large informal sectors. Building on previous work that measures QoE deprivation, we use the Alkire/Foster (AF) method to construct a synthetic indicator of the quality of employment (QoE) at an individual level. We select three dimensions that must be considered as both instrumentally and intrinsically important to workers: income, job security and employment conditions. Job security is then divided into two sub-dimensions (occupational status and job tenure), as is employment conditions (social security affiliation and excessive working hours). A threshold is then established within each dimension and sub-dimension to determine whether a person is deprived or not within each dimension, before calculating composite levels of deprivation. The results generated by this index highlight important differences between Chile's regions, but also a process of convergence, which has been driven by employment regulation on minimum wages and the statutory working week in particular. National policies such as the improvement of educational standards have also contributed to this process. On the one hand, this paper illustrates the importance of public policies in labour market performance, and on the other, the index also enables policy makers to focus more precisely on the most vulnerable groups of workers in the labour market. This paper opens up important avenues for future research: once a QoE index has been developed, it can be used to track workers' employment trajectories using either panel or administrative data. This would allow policy makers to understand, whether and to what extent workers become trapped in poor quality jobs, and what active labour market policies could do to help them.
Prioritarianism and equality of opportunity
This paper asks whether prioritarianism – the view that social welfare orderings should give explicit priority to the worse-off – is consistent with the normative theory of equality of opportunity. We show that there are inherent tensions between some of the axioms underpinning prioritarianism and the principles underlying equality of opportunity; but also that these inconsistencies vanish under plausible adjustments to the domains of two key axioms, namely anonymity and the transfer principle. That is: reconciling prioritarianism and equality of opportunity is possible but allowing room for individual responsibility within prioritarianism requires compromises regarding the nature and scope of both impartiality and inequality aversion. The precise nature of the compromises depends on the specific variant of the theory of equality of opportunity that is adopted, and we define classes of social welfare functions and discuss relevant dominance conditions for six such variants. The conflicts and the paths to reconciliation are illustrated in an application to South Africa between 2008 and 2017, where results suggest broad empirical agreement among the different approaches.
Quality of sub-national government and regional development in Africa
Despite widespread interest in government quality and economic development, the role of sub-national government has been largely overlooked. This represents an omission in Africa, given ongoing processes of devolution in much of the continent. In this article, we consider the impact of sub-national government institutions on economic development in 356 regions across 22 African countries. We create a novel index of sub-national government quality based on large-scale survey data and assess its impact on regional economies using satellite data on night light luminosity. To address causality concerns, we instrument sub-national government quality with data from pre-colonial societies. Our results show a positive and significant relationship between sub-national government quality and regional economic development, even when controlling for the quality of national level institutions. Better sub-national governments are a powerful but often overlooked determinant of development in Africa.
The sociology of elites: a European stocktaking and call for collaboration
The aim of this working paper is to provide a stocktaking of major sociological interventions in elite research over the past decade, as a means of providing a comprehensive account of what has been achieved so far by numerous research teams (see also Heilbron 2017). This stocktaking is designed to clear a platform for the more important work of developing a methodology and perspective for comparative sociological analysis of elite formation going forward. It is hoped therefore that this working paper will be a valuable resource for anyone wishing to find a systematic bibliography to recent sociological research on elites.
Accessing information and resources via arrival infrastructures: migrant newcomers in London
In much public discourse, it is assumed that migrants in Europe settle into contexts populated by national majorities or co-ethnics. However, today, new migrants often move into areas which have already been settled by earlier migrants of various backgrounds. Such areas have also been described as ‘arrival areas’, often situated within ‘arrival cities’ which have seen immigration (and emigration) over many decades. They are characterized by a wealth of ‘arrival infrastructures’, consisting of concentrations of institutions, organisations, social spaces and actors which specifically facilitate arrival. Arrival infrastructures comprise, for example, shops as information hubs, religious sites, language classes, hairdressers etc., often set up by people who themselves have a migration background. This article looks at the interactions and transfer of knowledge and resources between long-established migrants and more recent newcomers through arrival infrastructures. By drawing on ethnographic fieldwork in East London, and using the example of two recently arrived female migrants, it investigates how newcomers access settlement information and the role played by arrival infrastructures in this process. It specifically focuses on newcomers who arrive with few social contacts and for whom physically visible arrival infrastructures like libraries and shops are particularly relevant. The article aims to open up debate about arrival infrastructures, their manifestation in different urban contexts, and their relation to both new forms of solidarity as well as new and ongoing forms of exploitation between long-established residents and newcomers.
Investigating the gender wealth gap across occupational classes
This study examines the role of occupational class in the Gender Wealth Gap (GWG). Despite rising interest in gender differences in wealth, the central role of occupations in restricting and enabling its accumulation has received less scrutiny thus far. Drawing on the German Socio-economic Panel, we employ quantile regressions and decomposition techniques. We find explanatory power of occupational class for the gender wealth gap, which operates despite accounting for other labour-market-relevant parameters, such as income, tenure, and full-time work experience at all points of the wealth distribution. Wealth gaps by gender vary between and within occupational classes. Particularly, women's under-representation among the self-employed and over-representation among socio-cultural professions explain the GWG. Our study thus adds another dimension of stratification - occupational class - to the discussion of the gendered distribution of wealth.
The economic consequences of major tax cuts for the rich
This paper uses data from 18 OECD countries over the last five decades to estimate the causal effect of major tax cuts for the rich on income inequality, economic growth, and unemployment. First, we use a new encompassing measure of taxes on the rich to identify instances of major reductions in tax progressivity. Then, we look at the causal effect of these episodes on economic outcomes by applying a nonparametric generalization of the difference-in-differences indicator that implements Mahalanobis matching in panel data analysis. We find that major reforms reducing taxes on the rich lead to higher income inequality as measured by the top 1% share of pre-tax national income. The effect remains stable in the medium term. In contrast, such reforms do not have any significant effect on economic growth and unemployment.
Unemployment insurance in Chile: lessons from a high inequality developing country
One of the most complex social policy issues that developing countries commonly face is the question of how they can protect the unemployed. However, the analysis of unemployment insurance (UI) in developing economies with large informal sectors is in its infancy, with few papers providing solid empirical evidence. This paper makes several contributions to the development literature: first, it applies Chetty’s 2008 landmark work on UI to a developing country (Chile) and shows that the moral hazard effects expected by policy makers, who designed the system are minimal, while liquidity effects were entirely neglected. By means of an RDD, it analyses the Chilean UI system using a large sample of administrative data, which allows for an extremely precise analysis of how the system is working, thus providing invaluable empirical lessons for other developing countries. Second, this paper shows that it is not enough merely to quantify an effect such as moral hazard, but to understand its causes and implications. An extended unemployment period stemming from moral hazard has extremely different welfare implications than one stemming from a liquidity effect and should therefore result in different policy recommendations. Third, our results also highlight that the Chilean UI system is regressive overall, as it protects workers with higher income levels and more stable jobs much more than it protects vulnerable workers, who are also much more likely to become unemployed. Fourth, this paper shows that it is essential that developing countries should take into account the specific labour market and macroeconomic context when designing social policies as the incentives embedded in such a policy may not be enough to compensate for the limitations that arise from the structure of a labour market. This research thus has implications for many developing countries, which may also be considering the implementation of some form of UI and/or the partial or complete replacement of existing severance pay legislation with continuous contributions to individual savings accounts, as recommended by the international development institutions. Furthermore, even high-income developing countries, such as Chile, cannot rely on unemployment insurance alone when it comes to protecting workers from the fallout of an economic crisis or rapid changes in the labour market that generate unemployment. Any UI system must also be linked to other social protection mechanisms to provide complimentary benefits to workers with precarious jobs.
Income Inequality and the absence of a Tawney moment in the mass media
In this paper we address the paradox of increasing income inequality and the absence of public mobilization around the issue. As the mass media are our most important source of information on wider economic affairs, we examine the salience and framing of income inequality within major UK and US newspapers over the period 1990 – 2015. Despite an initial surge in media attention and again towards the end of the period, the issues-attention cycle of inequality resembles a hype-cycle that is more common with arcane academic or techno-scientific topics than with social mobilisation. The dominant frames present income inequality as the seemingly inevitable result of globalization, market forces and technological change. No new radical frames of economic injustice have emerged, neither have any new actors, and so policy solutions fall back onto existing left-right approaches.
Occupational dualism and intergenerational education mobiltiy in the rural economy: evidence from China and India
This paper extends the Becker-Tomes model of intergenerational educational mobility to a rural economy characterized by farm-nonfarm occupational dualism and provides a comparative analysis of rural China and rural India. The model builds a micro-foundation for the widely used linear-in-levels estimating equation. Returns to education for parents and productivity of financial investment in children’s education determine relative mobility, as measured by the slope, while the intercept depends, among other factors, on the degree of persistence in nonfarm occupations. Unlike many existing studies based on coresident samples, our estimates of intergenerational mobility do not suffer from truncation bias. The sons in rural India faced lower educational mobility compared with the sons in rural China in the 1970s to 1990s. To understand the role of genetic inheritance, Altonji et al. (2005) biprobit sensitivity analysis is combined with the evidence on intergenerational correlation in cognitive ability in economics and behavioral genetics literature. The observed persistence can be due solely to genetic correlations in China, but not in India. Father’s nonfarm occupation was complementary to his education in determining a sons’ schooling in India, but separable in China. There is evidence of emerging complementarity for the younger cohorts in rural China. Structural change in favor of the nonfarm sector contributed to educational inequality in rural India. Evidence from supplementary data on economic mechanisms suggests that the model provides plausible explanations for the contrasting roles of occupational dualism in intergenerational educational mobility in rural India and rural China.
The American knowledge economy
Perhaps the most extraordinary contribution of the US since the late C19th has been its leadership of successive waves of Schumpeterian innovation. These (three) waves are often referred to by economic historians as the Scientific Revolution (late C19th and early C20th), the Fordist Revolution (1920s), and the ICT Revolution (1980s on)12 . (The first wave historically, the co-called Industrial Revolution, based on iron, steam and coal, and centred on the UK, had taken place from the late C18th through the mid C19th.) One contribution of this paper is to explain how this dominance was possible in terms of key institutions of American advanced capitalism. It also stresses the key complementary role of the Federal government, the Supreme Court and city administrations, in the Scientific and Fordist technological revolutions.
Bringing the social structure back in: a rents-based approach to inequality
Motivated by a perceived lacuna in theoretical discussions on income inequality, this paper explores an approach based on the place in that inequality of economic rents. Although widely recognized as a subject to be considered in relation to inequality, rents are still failing to receive a conceptually and theoretically unified treatment. In fact, although accepted as an element in the distribution branch of economics, economic rents have been subject to a somewhat incomplete treatment, especially when it comes to understanding the origin in wealth ownership. This blind spot invites cross-disciplinary collaboration as a means of elucidation. So, in this paper, I review and systematize scattered conceptual and theoretical contributions on the subject drawn from the literatures of both economics and sociology. Briefly, while economics delineates the market phenomenon giving rise to rents, sociology sheds light on the influence of background social structure on both the supply and demand blades of the ‘market scissor’. This is to some extent reminiscent of Marx’s class struggle analysis; but Marx’s original view is amplified by the sociological perspectives I review here, as the latter identify and conceptualize rents earned by labour in addition to those earned by capital. Two ideas that sprang from my reading of the sociological perspectives should be placed at the very core of a rents-based approach to inequalities. The first is that the normal functioning of markets does not make economic rents disappear; the second is that all earnings are relative, so that rents, including negative rents, are a vital part of everyone’s remuneration in contemporary capitalist economies. An outline of a rents-based theory of inequality is proposed and normative and policy consequences of undertaking this move are hinted at.
Elites and inequality: a case study of plutocratic philanthropy in the UK
This paper investigates the role of elite philanthropy in the context of rising global inequality, asking whether large-scale philanthropic donations by elites are well placed to help tackle structural inequality. The challenges posed by such “plutocratic philanthropy” are explored through analysis of a network of the top 30 philanthropists in the United Kingdom and their connections to businesses and foundations, which shows their financial scale and connectivity. This new data is embedded into a review of the most recent social science literature on elites, which focuses on elite reproduction, how wealthy families perceive inequality, and how and why they engage in philanthropic activities. From this data, the paper develops an analysis of the current landscape of inequality, based on the work of British sociologist Mike Savage (2015), arguing that elite philanthropy as an ecosystem— made up of capital, people and institutions—is not well placed to systemically challenge inequalities, because the financial size of elites’ philanthropy tends to be dwarfed by their business activities, and the social functions of philanthropy help maintain the advantaged positions of elites. The paper concludes with informed policy considerations on the role of elite philanthropy in light of the results of the analysis.
Lives and LivelihoodsEstimates of the Global Mortality and Poverty Effects of the Covid-19 Pandemic
This paper evaluates the global welfare consequences of increases in mortality and poverty generated by the Covid-19 pandemic. Increases in mortality are measured in terms of the number of years of life lost (LY) to the pandemic. Additional years spent in poverty (PY) are conservatively estimated using growth estimates for 2020 and two dif-ferent scenarios for itsdistributional characteristics. Using years of life as a welfare metric yields a single parameter that captures the underlying trade-off between lives and livelihoods: how many PYs have the same welfare cost as one LY. Taking an agnostic view of this parameter, estimates of LYs and PYs are compared across countries for different scenarios. Three main findings arise. First, as of early June 2020, the pandemic (and the observed private and policy responses) has generated at least 68 million additional poverty years and 4.3 million years of life lost across 150 countries. The ratio of PYs to LYs is very large in most coun-tries, suggesting that the poverty consequences of the crisis are of paramount importance. Second, this ratio declines systematically with GDP per capita: poverty accounts for a much greater share of the welfare costs in poorer countries. Finally, the dominance of poverty over mortality is reversed in a counterfactual “herd immunity” scenario: without any policy intervention, LYs tend to be greater than PYs, and the overall welfare losses are greater.
Managing racism? Race equality and decolonial educational futures
The Office for Students is now holding UK universities to account for their failures to address racial inequalities, and the Teaching Excellence Framework is bringing the student experience to the fore in assessing higher education institutions. As the twin crises of Covid- 19 and the murder of George Floyd have highlighted in an unprecedented way, racial inequalities and injustices persist in spite of decades of legislation aiming to promote equality and end discrimination. The paper considers two main areas of ‘racial equalities’ work, namely anti-racist initiatives and decolonial initiatives. It suggests that the rise of managerialism and in particular, audit cultures, have allowed racism to flourish in spite, or rather because of, the need to account for equality, diversity and inclusion in global markets for higher education. Auditing requires a focus on identities, and cannot take into account the complex ways in which race, race thinking and racism are maintained in knowledge production. The lack of consensus around what decolonial education should be undermines attempts to produce educational social justice. From a feminist postcolonial perspective, the paper suggests that recentralising racism and reengaging difference as a way to negotiate more just educational futures.
Inequality, living standards and growth: two centuries of economic development in Mexico
Historical wage and incomes data are informative both as normative measures of living standards, and as indicators of patterns of economic development. We show that, given limited historical data, median incomes are most appropriate for measuring welfare and inequality, while urban unskilled wages can be used to test dualist models of development. We present a new dataset including both series in Mexico from 1800 to 2015 and find that both have historically failed to keep up with aggregate growth: per worker GDP is now over eight times higher than in the nineteenth century, while unskilled urban real wages are only 2.2 times higher, and median incomes only 2.0 times. From the perspective of inequality and social welfare, our findings confirm that there is no automatic positive relationship between economic growth and rising living standards for the majority. From the perspective of development, we argue that these findings are consistent with a dual economy model based on Lewis’s assumption of a reserve army of labour, and explain why Kuznets's predicted decline in inequality has not occurred.
EU migrants' experiences of claims-making in German job centres
The paper describes intra-EU migrants’ experiences with (transnational) social security in Germany, showcasing their sense-making of the claims-making process to basic subsistence benefits in local job centres. The analysis of 48 qualitative interviews with intra- EU migrants and key informants illustrates how they are not merely passive recipients but may actively assert their rights, based on their degree of familiarity with German welfare bureaucracy, their pre-existing welfare expectations, and their available cultural and social capital. Whether EU migrant citizens decide to claim relates to their cost-benefit analyses on the accessibility to benefits and to alternative means of support, as well as their perceived social legitimacy to draw on German public social support. As a general trend, EU citizens first tried to exhaust all other means of generating an income, seeking to remain financially independent from state-provided welfare, before seeking to claim social assistance-type benefits as a last resort. The data also shows how some applicants are less able than others to pay the hidden costs imposed onto them during the claiming process. The paper finally highlights how, in the light of the inequalities of access they face, intra-EU migrants have developed a variety of strategies to satisfy their social protection needs, relying on a mix of formal and informal welfare arrangements.
Entrepreneurship and the fight against poverty in US CitiesEntrepreneurship is sometimes portrayed as a cure-all solution for poverty reduction. Proponents argue it leads to job creation, higher incomes, and lower poverty rates in the cities in which it occurs. Others, by contrast, posit that many entrepreneurs are actually creating low-productivity firms serving local markets. Yet, despite this debate, little research has considered the impact of entrepreneurship on poverty in cities. This paper addresses this gap using a panel of US cities for the period between 2005 and 2015. We hypothesise that the impact of entrepreneurship depends on whether it occurs in tradeable sectors – and, therefore, is more likely to have positive local multiplier effects – or non-tradable sectors, which may saturate local markets. We find that entrepreneurship in tradeables reduces poverty and increases incomes for non-entrepreneurs. The result is confirmed using an instrumental variable approach, employing the inheritance of entrepreneurial traits as an instrument. In contrast, while there are some economic benefits from non-tradeable entrepreneurship, we find these are not large enough to reduce poverty.Download paper
Inequality as Entitlements over Labour
The modern study of economic inequality is based on the distribution of entitlements over goods and services. But social commentators at least since Rousseau have been concerned with a different aspect of economic inequality: that it implies that one person is entitled to command another person for their own personal ends. I call this inequality as entitlements over labour. I propose to measure entitlements over labour by calculating the extent to which top income groups can afford to buy the labour of others for the purpose of their personal consumption. Unlike standard inequality measures, this measure is not welfarist, but instead has its normative basis in relations of domination, hierarchy and social status between people. I estimate entitlements over labour in three high-inequality and two low-inequality countries and argue that inequality as entitlements over labour is socially and politically salient, capturing a side of inequality neglected by standard measures.Download paper.
How the Reification of Merit Breeds Inequality: Theory and Experimental Evidence
In a variety of social contexts, measuring merit or performance is a crucial step toward enforcing meritocratic ideals. At the same time, workable measures – such as ratings – are bound to obfuscate the intricacy inherent to any empirical occurrence of merit, thus reifying it into an artificially crisp and clear-cut thing. This article explores how the reification of merit breeds inequality in the rewards received by the winners and losers of the meritocratic race. It reports the findings of a large experiment (n = 2,844) asking participants to divide a year- end bonus among a set of employees based on the reading of their annual performance reviews. In the experiment’s non-reified condition, reviews are narrative evaluations. In the reified condition, the same narrative evaluations are accompanied by a crisp rating of the employees’ performance.
We show that participants reward employees more unequally when performance is reified, even though employees’ levels of performance do not vary across conditions: most notably, the bonus gap between top- and bottom-performing employees increases by 20% between our non-reified and reified conditions, and it rises by another 10% when performance is presented as a quantified score. Further analyses suggest that reification fuels inequality both by reinforcing the authoritativeness of evaluation and by making observers more accepting of the idea that individuals can be meaningfully sorted into a merit hierarchy. This has direct implications for understanding the rise of legitimate inequality in societies characterized by the proliferation of reifying forms of evaluation.
Superstar cities and left-behind places: disruptive innovation, labor demand, and interregional Inequality
After a long period of convergence, around 1980, inter-place gaps in economic well-being in the United States began to increase. This rising inequality offers a rich terrain to explore causality in regional economics and development theory. This paper presents new, long-run evidence on interregional inequality that highlights the need to situate the current moment in a context of episodic alternations between convergence and divergence. In light of this evidence, the paper revisits the theoretical literature, finding gaps in existing supply- anddemand-side models. A demand-led perspective can be strengthened by integrating a primary role for disruptive technological change. We posit a theory of alternating waves, where major technology shocks initially concentrate, and eventually deconcentrate, demand for skilled workers performing complementary tasks. Labor supply responds to these centripetal and centrifugal forces. These reversals yield the observed patterns of rising and falling interregional inequality. We trace out the implications of this theory in both academic and policy terms.
The art world’s response to the challenge of inequality
This paper considers the challenges which rising economic inequality poses to the art world with a special focus on museums and galleries in the UK. Based on interviews with artists, curators and managers of leading art institutions in London, we discuss how issues of economic inequality are reflected in their thinking about cultural work and how these relate to questions of spatial power, post-colonial sensibilities and diversity issues. We show how increasing economic inequality brings about deep-seated, systematic and sustained challenges which extend well beyond public funding cuts associated with austerity politics to a wider re-positioning of the arts away from its location in a distinctive public sphere and towards elite private privilege. Against this backdrop, we put forward the term ‘the artistic politics of regionalism’ and suggest that the most promising approaches to addressing contemporary inequalities lie in institutions’ reconsideration of spatial dynamics which can link concerns with decolonisation and representation to a recognition of how economic inequality takes a highly spatialised form.
Sharp declines in wealth-concentration occurred across Europe and the US during the 20th century. But this stylized fact is based on declared wealth. It is possible that today the richest are not less rich but rather that they are hiding much of their wealth. This paper proposes a method to measure this hidden wealth, in any form. In England, 1920-1992, elites are concealing 20-32% of their wealth. Among dynasties, hidden wealth, independent of declared wealth, predicts appearance in the Offshore Leaks Database of 2013-6, house values in 1999, and Oxbridge attendance, 1990-2016. Accounting for hidden wealth eliminates one-third of the observed decline of top 10% wealth-share over the past century.
Exporting the winner-take-all economy: Micro-level evidence on the Impact of US Investors on Executive Pay in the United Kingdom
Existing studies of the political determinants of top incomes and inequality tend to focus on developments within individual countries, neglecting the role of potential interdependencies that transcend national borders. This article argues that the sharp rises in top incomes around the world in recent years are in part a product of specific features of the US political economy, which were subsequently exported to other economies through the global expansion of US-based financial investors. To test the argument, we collect fine-grained micro-level data on executive pay and firm ownership structures for a comprehensive sample of publicly listed firms in the United Kingdom (UK). Our analyses uncover robust evidence that the Americanization of UK firm ownership leads to sizable pay increases for high-level managers at those firms. Scrutinizing the causal mechanisms underlying this effect, we find them to be more consistent with changes in executive bargaining power than market-related factors such as skills premia or better corporate performance. The findings have important implications for the literature on the international political economy of inequality.
Social polarisation at the local level: a four-town comparative study
The concept of polarisation, where the extremes of a distribution are growing and where there is a missing or shrinking ‘middle’, has attracted recent interest driven by concerns about the consequences of inequality in British society. This paper brings together evidence of economic, spatial and relational polarisation across four contrasting towns in the United Kingdom: Oldham, Margate, Oxford and Tunbridge Wells. Deploying a comparative community analysis, buttressed by quantitative framing, we demonstrate the need to recognise how local social processes vary amongst places that on the face of it display similar trends. We show how local polarisation plays out differently depending on whether it is driven ‘from above’ or ‘from below’. Across all four towns, we draw out how a ‘missing middle’ of intermediaries who might be able to play roles in cementing local relations poses a major challenge for political mobilisation in times of inequality.
Subjective Poverty as perceived lasting social insecurity: Lessons from a French survey on poverty, inequality and the welfare state (2015-2018)
Literature has long been attentive to the study of subjective happiness or well-being. Key questions developed in the late 1970’s have recently been framed as indicators of subjective economic stress or used to build “consensual poverty lines”. Yet, these notions differ from an authentic – i.e. direct – measure of subjective poverty. We use 2015-2018 French data to determine the share of the population who considers itself as poor and study its social composition. Our results demonstrate that class, family composition and income instability matter as determinants of subjective poverty. The key feature of the group of those who consider themselves as poor is a degraded attitude towards their own future. Finally, we propose a sociological understanding of our subjective poverty indicator.Download paper
Ethnic minorities’ reactions to newcomers in East London: symbolic boundaries and convivial labour
In much public discourse on immigrants in Western Europe, perceptions towards newcomers are discussed in relation to what white national majorities think. However, today, new migrants often move into places which are already settled by previous migrants. Surprisingly little is known about the local experiences, perceptions and attitudes towards newcomers among long-established ethnic minorities in areas which they have made their home, and where they predominate not just in numbers but also by way of shops, religious sites, school population, etc. Based on ongoing ethnographic fieldwork in East London (UK), this paper looks at long-established ethnic minority residents’ attitudes towards newcomers from Eastern Europe, and how these are shaped by their own histories of exclusion. By bringing together theories on symbolic boundary making with the concept of ‘convivial labour’ (Nobel 2009; Wise 2016), it shows how experiences of stigmatization impact on perceptions of white newcomers, and how these perceptions are characterized by a combination of empathy and resentment.
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The construction of the DALY: Implications and anomalies
The disability-adjusted life year (DALY) is a measure of aggregate ill-health whose construction depends on a counterfactual – the number of life-years a person could have expected to live had she or he not died. There are two ways of specifying the DALY counterfactual to estimate years of life lost (YLL) – by employing an ‘exogenous’ or an ‘endogenous’ life table. An exogenous life table is independent of the mortality risks experienced by the population whose health (longevity) is being assessed, whereas an endogenous life table is composed of precisely these risks.
Exogenous life tables have been used to construct the DALY in the Global Burden of Disease (GBD) studies – with different exogenous life tables used in the GBD 1990 and GBD 2010 (and later) exercises. However, an endogenous life table is more appropriate for predicting life-years lost from premature mortality in any given country, and allocating resources through health interventions there on the basis of DALYs averted.
Whether an exogenous or an endogenous life table is used, anomalies can arise. Furthermore, the approach adopted in GBD 2010 onwards adds special difficulties of its own. GBD 2010 and later GBDs use an exogenous reference life table which is the same for men and women. This leads to an underestimation of the disease burden of women relative to that of men.
Group rights and gender justice: exploring tensions within an indigenous community in India
This paper seeks to address some of the tensions identified in the political literature between group rights, which allows historically marginalized communities some measure of self-governance in determining its own rules and norms, and the rights of marginalized sub-groups, such as women, within these communities. As the literature notes, community norms frequently uphold patriarchal structures which define women as inferior to men, assign them a subordinate status within the community and cut them off from the individual rights enjoyed by women in other sections of society.
There is a tendency within this literature to assume that if women within these communities fail to exercise ‘voice’ by protesting gender injustice within their community or choose ‘exit’ by giving up their membership of the community, they can be deemed to have consented to their subordinate status within the community. Yet, as feminists have pointed out, the capacity for neither voice nor exit can be taken for granted. Indeed, community norms may be organized in ways that explicitly deny women any voice in its decision-making forums as well as the resources they would need to survive outside the community.
This paper draws on quantitative and qualitative research among the Gond, an Adivasi or indigenous community in the Chattisgarh state in India to explore this debate in greater detail. The Gond community, like other Adivasi groups in India, have long been among the poorest and most socially marginalized sections of the Indian population. In recognition of their historical disadvantage, the Indian constitution allows these communities a degree of self-governance within the territories in which they are concentrated. As our research shows, this has allowed these communities to uphold norms that systematically discriminate against women, exercising greater controls over their marital, sexual and reproductive behaviour than men, denying them equal access to community resources and excluding them from community decision making forums.
Given the strength of the forces within the community militating against their capacity for either voice or exit, the question motivating the research was whether external organizations could make a difference to one or other or both. Our research set out to answer this question by exploring the impacts of two external development organizations, BIHAN and PRADAN, that sought to work with women within these communities, organizing them into self-help groups in order to promote access to new financial resources and livelihood skills as well as their political capabilities within the community and government decision-making domains. We ask whether these organizations were effective in their objectives, whether they had any impact on women’s voice and exit options and whether the kind of organization they were made a difference to the impacts that we found.
American Exceptionalism in Inequality and Poverty: a (tentative) historical explanation
The United States is a fascinating case study in the complex links between crime, punishment and inequality, standing out as it does in terms of inequality as measured by a number of economic standards; levels of serious violent crime; and rates of imprisonment, penal surveillance and post-conviction disqualifications. In this chapter, we build on previous work arguing that the exceptional rise in violent crime and punishment in the US from the mid 1970s to the early 1990s could be explained by the interaction of four political and economic variables: ‘technological regime change’; ‘varieties of capitalism’ and ‘varieties of welfare state’; types of ‘political system’; and – critically and specifically – the US as a radical outlier in the degree of local democracy. Here we ask three further questions implied by our previous work. First, why did such distinctive patterns of local democracy arise in America? And to what extent is this political structure tied up with the history and politics of race? Second, what did the distinctive historical development of the US political economy in the 19th century imply for the structure of its criminal justice institutions? And third, why did the burden of crime and punishment come to fall so disproportionately on African Americans?
Do Firms Manage Pay Inequality?We examine the role of the modern firm in generating income inequality. Specifically, we consider the growth in the use of asset-based rewards for senior executives, combined with continued use of salaries and wages for other employees, and the impact this has on measures of inequality within firms. Our paper presents data on intra firm inequality from the UK FTSE 100 for the period 2000-2015. It looks at ratios of CEO to average earnings and attempts to explain both the growth in inequality on this measure and the extent of variance between firms. It distinguishes between a period of “administered inequality” up to the early 1980’s when intra-firm processes defined differential pay and a subsequent one of “outsourced inequality” when capital market measures dominate executive pay. In the latter period, intra firm inequality measures are defined by upward movements in capital market measures and the extent of outsourcing of low paid work.
Where is the Middle Class? Inequality,Gender and the Shape of the UpperTail from 60 million English Death and Probate Records, 1892-2016
This paper analyses a newly constructed individual level dataset of every English death andprobate from 1892-2016. The estimated top wealth shares match closely existing estimates.However, this analysis clearly shows that the 20th century's `Great Equalization' of wealthstalled in mid-century. The probate rate, which captures the proportion of English with anysignificant wealth at death rose from 10% in the 1890s to 40% by 1950 and has stagnated to2016. Despite the large declines in the wealth share of the top 1%, from 73% to 20%, themedian English person died with almost nothing throughout. All changes in inequality after1950 involve a reshuffling of wealth within the top 30%. Further, I find that a log-lineardistribution fits the empirical data better than a Pareto power law. Finally, I show that the topwealth shares are increasingly and systematically male as one ascends in wealth, 1892-1992, but this has equalized over the 20th century.
This report sets an agenda to scale up inclusive employment practice through policies that focus on the demand side: incentivising and supporting employers. Decades of focus on the supply side – requiring or supporting disabled individuals to move towards work – have left the UK with stubborn disability employment and pay gaps. A different approach is needed.
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Rent Sharing and Inclusive Growth
The long-run evolution of rent sharing is empirically studied. Based upon a comprehensive and harmonized panel of the top 300 publicly quoted British companies over thirty five years, the paper reports evidence of a significant fall over time in the extent to which firms share rents with workers. It confirms that companies do share their profits with employees, but at much smaller scale today than they did during the 1980s and 1990s. This is a robust finding, corroborated with industry-level analysis for the US and EU. The decline in rent sharing is coincident with the rise of product market power that has occurred as worker bargaining power has dropped. Although firms with more market power previously shared more of their profits, they experienced a stronger fall in rent sharing after 2000.
Populism and the Rule of Law
The resurgence of populism in Europe and North America is widely thought to have placed the rule of law under pressure. But how many of the relevant developments are indeed associated with populism? And is any such association a contingent or analytic matter: does populism inevitably threaten the rule of law, or do other conditions intervene to shape its impact? After setting out how I will understand the rule of law and populism, I examine the ways in which contemporary populist discourse has challenged the rule of law through a variety of mechanisms - notably agenda-setting, policy impact, influencing discretionary decisions and convention-trashing - considering the institutional and social conditions which conduce to strengthen or weaken these mechanisms in particular contexts. Finally, I consider the implications of the analysis for contemporary criminalisation, assessing how many of the factors producing ‘penal populism’ or ‘overcriminalization’ are truly a product of populism.
This paper elaborates a framework for understanding inequalities that is multi-dimensional, inter-disciplinary, and dynamic. We first clarify the conceptual relationship between individual and categorical inequalities as studied by economists, sociologists, and other social scientists. We then present a set of new concepts. Inequality diversion is defined as a reduction in one form of inequality that is dependent on sustaining, or worsening, another form of inequality. We show how it arises out of cases in the literature on intersectionality, and that it also characterizes the transition to increasing meritocracy, and the relationship between increasing professional female labour market participation and domestic service. Inequality re-ordering is defined as a change in categorical or group inequalities that leaves individual inequality unchanged, such as when elites become more categorically diverse without reducing their economic or social distance from non-elites. We use these concepts to interrogate the potential of levelling up and progressive redistribution for inequality reduction. Exploring these relationships helps us understand trade-offs and complementarities in tackling inequalities.
The Great British Sorting Machine: Adolescents’ future in the balance of family, school and the neighborhood
Research calls attention to the divergent school and labor market trajectories of Europe’s youth while, across the Atlantic, researchers describe the long-lasting consequences of poverty on adolescent development. In this paper we incorporate both processes to shed a new light on a classic concern in the sociology of stratification: how are adolescents’ aspirations, expectations, and school performance shaped by the combined socioeconomic contexts of family, school and neighborhood life? Theoretically, social contexts provide children with cultural resources that may foster their ambitions and bolster their academic performance. Reference group theory instead highlights how seemingly positive settings can depress educational performance as well as aspirations and expectations. We empirically test these competing claims, drawing on the Avon Longitudinal Study of Parents and Children (ALSPAC) which describes the school and neighborhood trajectories of 7,934 British children followed from birth to adolescence. We find that, generally, childhood school and neighborhood deprivation is negatively associated with adolescents’ school performance, aspirations and expectations for their future, in line with the cultural resource perspective. However, there are important exceptions to this pattern which point to reference group processes for (1) children of highly-educated parents, whose academic performance especially suffers from growing up in a poor neighborhood, and (2) for children from low-educated parents, whose academic aspirations and expectations are unexpectedly high when they either went to an affluent school or lived in an affluent neighborhood—but not both. We conclude by discussing implications for theory, policy and future research.
Inclusive Growth in Cities: a sympathetic critique
The concept of “Inclusive Growth” – a concern with the pace and pattern of growth – has become a new mantra in local economic development. Despite enthusiasm from some policymakers, others argue it is a buzzword which is changing little. This paper summarises and critiques this agenda. There are important unresolved issues with the concept of Inclusive Growth, which is conceptually fuzzy and operationally problematic, has only a limited evidence base, and reflects an overconfidence in local government’s ability to create or shape growth. Yet, while imperfect, an Inclusive Growth model is better than one which simply ignores distributional concerns.
Mapping recent inequality trends in developing countries
Over the course of the middle half of the 20th century, countries around the world underwent dramatic social transformations as incomes grew, inequality declined and living standards improved. Since roughly 1980, however, this downward trend in income inequality has reversed or stagnated in many regions. Leading researchers have warned that we are entering a new era of high and persistent inequality coupled with low economic growth (Piketty 2014; Scheidel 2017). Yet other research suggests that this inequality escalation is not a universal phenomenon. As many scholars of global inequality have noted, Latin America saw a sizable decline in the gini index in the 2000s. The available evidence also suggests that many countries in Africa and the Middle East experienced an inequality drop in the 1990s-2000s. Even in Asia, where aggregate inequality has been on the rise, there are nonetheless a few countries where inequality is defying the regional trend. What does the available evidence tell us about inequality trends in these less studied regions of the world? What may explain these different trajectories across regions or countries? This paper provides a review of the state of knowledge about inequality dynamics in developing regions, with a focus on countries where the level of income inequality has fallen in recent decades. It is written to inform future research at LSE’s International Inequalities Institute about the political drivers of redistribution.
Recasting Human Development Measures
The UNDP introduced three new human development measures in its 2010 HumanDevelopmentReport, which it has since continued to estimate and report on annually. These measures are the geometrically-averaged Human Development Index (HDI), the Inequality-adjusted Human Development Index (IHDI), and the Gender Inequality Index (GII). This paper critically reviews these measures in terms of their purpose, concept, construction, properties, and data requirements. It shows that all three measures suffer from serious defects, and concludes that two of them are not fit for purpose. The paper suggests how HDI and GII might be recast to overcome the problems identified and better reflect the purposes for which they were devised.
The Stakes of Trade Policy: domestic and global inequalities
Economic nationalism is on the rise, while decision-making is floundering within multilateral and regional trade institutions. As stakes ‘take back control’ over their trade policies, what does this imply for domestic and global inequalities? The paper will clarify how a state’s trade policy can affect what matters about domestic inequalities, global procedural fairness, and global distributional inequality. A state should aim to: i) pursue gains in national income, without making excessive contributions of its ‘policy space’ on issues that matter for disadvantaged groups; ii) refrain from abusing its unilateral decision-making power over its trading partners; and iii) prioritize trade liberalization with poor countries that have the competencies to take advantage of economic opportunities and that are likely to share the benefits of prosperity with disadvantaged citizens. There is room for a state’s trade policy to represent improvements over existing multilateral and regional institutions with respect to these aims, although improvements are by no means guaranteed.
Private Renting: can social landlords help?
Private renting is a massively expanding sector, and has now overtaken social housing to become the second largest housing tenure in Britain after owner-occupation. Private renting plays a crucial role in housing many groups who can neither afford to buy, and are unable to access social housing. Vulnerable and homeless people are more and more housed in privately rented accommodation. However, the private rented sector is weakly regulated and offers little security to tenants.
This report explores how social landlords are increasingly contributing to the growth of private renting in a variety of different ways. Social landlords have experience in managing rented housing and a strong track record in providing long-term, secure, decent homes. They have an ethical purpose and a core mission to house people. Their involvement in the private rented sector provides an opportunity to make the PRS more stable, secure, and affordable. As well-established landlords and housing managers, social landlords can provide decent quality and secure homes to the people who need them within the private sector. As institutional investors, private renting at sub-market or intermediate rent becomes possible and social landlords should not seek to maximise profits as their main purpose. We also look at how local authorities can improve the private rented sector, looking at case studies of Newham, Liverpool, and other areas that have established local housing companies, have increased their regulatory role with licensing schemes and enforcement powers, as well as how the private rented sector differs in the devolved nations.
The overall conclusion of our report is that private renting by social landlords can deliver good housing for households in need of a home. This activity provides decent private rental homes; and surpluses to cross-subsidise social housing. We believe that through the development of private rented accommodation and the regulation and licensing of the private rented sector, social landlords and local authorities are able to provide a more social model of private renting.
Can cultural consumption increase future earnings? Exploring the economic returns to cultural capital
Cultural consumption is often viewed as a form of embodied cultural capital which can be converted into economic rewards because such practices increase the likelihood of moving into privileged social positions. However, quantitative evidence supporting this proposition remains uncertain because it is often unable to rule out alternative explanations. Cultural consumption appears to influence hiring decisions in some elite firms, in both the U.S. and the U.K., but it is unclear whether these processes are generaliseable to other professional occupations and other labour market processes such as promotions. We examine these processes using data from Understanding Society, an individual-level panel survey conducted in the UK, allowing us to explore whether cultural consumption predicts future earnings, upward social mobility, and promotions. People who consume a larger number of cultural activities are more likely to earn higher wages in the future, to be upwardly socially mobile, and to be promoted. Cultural consumption, then, can function as cultural capital in some labour market settings, potentially contributing to the reproduction of income inequality between generations.
Immobility and the Brexit vote
Popular explanations of the Brexit vote have centred on the division between cosmopolitan internationalists who voted Remain, and geographically rooted individuals who voted Leave. This paper conducts the first empirical test of whether residential immobility - the concept underpinning this distinction - was an important variable in the Brexit vote. It finds that locally rooted individuals - defined as those living in their country of birth - were 7 percent more likely to support Leave. However, the impact of immobility was filtered by local circumstances: immobility only mattered for respondents in areas experiencing relative economic decline or increases in migrant populations.
The transition to the knowledge economy, labour market institutions, and income inequality in advanced democracies
The transition from Fordism to the knowledge economy in the advanced democracies was underpinned by the ICT revolution. The introduction and rapid diffusion of ICT pushed up wages for college-educated workers with complementary skills and allowed top managers and CEOs to reap greater rewards for their talents. Despite these common pressures, income inequality did not rise to the same extent everywhere; the Anglo-Saxon countries stand out as being particularly unequal. To shed new light on this puzzle, we carry out a panel data analysis of 18 OECD countries between 1970 and 2007. The analysis stands apart from the existing empirical literature by taking a comparative perspective. We look at the extent to which the relationship between the knowledge economy and income inequality is influenced by national labour market institutions. We find that the expansion of knowledge employment is positively associated with both the 90–10 wage ratio and the income share of the top 1%, but that these effects are mitigated by the presence of strong labour market institutions, such as coordinated wage bargaining, strict employment protection legislation and high bargaining coverage. The study provides robust evidence against the argument that industrial relations systems are no longer important safeguards of wage solidarity in the knowledge economy.
Top Incomes during Wars, Communism and Capitalism: Poland 1892-2015
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.
The Wider Impacts of High-Technology Employment: Evidence from U.S. Cities
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.
Inequalities in the application of welfare sanctions in Britain
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.
Intersecting Inequalities and the Sustainable Development Goals: insights from Brazil
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.
Understanding the Determinants of Penal Policy: crime, culture and comparative political economy
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.
De-Democratisation and Rising Inequality: The Underlying Cause of a Worrying Trend
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.
A Relational Analysis of Top Incomes and Wealth: Economic Evaluation, Relative (Dis)advantage and the Service to Capital
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.
The rise and fall of Africa's bureaucratic bourgeoisie: public employment and the income elites of postcolonial Kenya and Tanzania
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.
Wealth, Top Incomes and Inequality
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.
The impact of benefit sanctioning on food insecurity: a dynamic cross-area study of food bank usage in the UK
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.
Land Politics under Kenya's New Constitution: Countries, Devolution, and the National Land Commission
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.
Who are the Global Top 1%?
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.
Gendering the elites: an ethnographic approach to elite women's lives and the re-production of inequality
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.
The measurement of health inequalities: does status matter?
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.
Top incomes and the gender divide
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.
The challenge of measuring UK wealth inequality in the 2000s
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%.
European Identity & Redistributive Preferences
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?
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.
An interview with Thomas Piketty
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.