Aart Kraay, Roy Van der Weide, 15 August 2017

Current approaches to measuring top and bottom incomes cannot track the fortunes of the same group of individuals over time. This column addresses this shortcoming by developing a new method for measuring income mobility. After accounting for mobility, the incomes of those who start out rich grow considerably more slowly, and incomes of those who start out poor grow faster, compared to commonly reported growth rates of top and bottom incomes.

Benjamin Faber, Thibault Fally, 02 August 2017

A recent literature has documented the impact of firm heterogeneity on workers’ earnings. This column assesses firm heterogeneity in the context of its impact on households’ cost of living. Rich and poor households source their consumption differently, and are therefore impacted differently by asymmetries in heterogeneous firms. An analysis suggests that moderate trade liberalisation could lead to a 1.5-2.5% lower cost-of-living inflation in retail consumption for the richest 20% of US households compared to the poorest 20%.

Carol Graham, 28 July 2017

Despite the long-held belief that high levels of inequality in the US signal future opportunity, a number of studies suggest that this is no longer the reality. This column examines trends in inequality from the perspective of well-being and focuses on non-economic aspects of welfare, including hope. The results reveal stark differences across people, races, and places in the US. Poor minorities – and blacks in particular – are much more hopeful than poor whites, while urban places are more hopeful than are rural ones, as are places with higher levels of diversity.

Thomas Piketty, Li Yang, Gabriel Zucman, 20 July 2017

Between 1978 and 2015, China moved being from a poor, underdeveloped country to the world’s leading emerging economy. But relatively little is known about how the distribution of income and wealth within the country changed over this period. This column presents the first systematic estimates of the level and structure of China’s national wealth since the beginning of the market reform process. The national wealth-income ratio increased from 350% in 1978 to 700% in 2015, driven mainly by the increase of private wealth.

Olle Hammar, Daniel Waldenström, 03 July 2017

Recent studies have analysed trends in global income inequality, but for most people in the world, labour earnings represent the vast majority of their income. This column uses a new global database on occupational earnings since 1970 to examine trends in earnings inequality between countries’ high- and low- earners, between countries, and between occupational groups. Global earnings inequality has fallen over the past half-century, and so has inequality within occupations, with main equalisation in the late 1990s and 2000s.

Johanna Wallenius, Max Groneck, 01 June 2017

At the individual level, social security is a strong source of redistribution from rich to the poor in the US, due to the concavity of the pension formula. But this column argues that spousal and survivor benefits, which are important sources of retirement income for women, introduce regressive redistributive elements to social security and also provide incentives for even highly educated women to stay at home if they are married to a high earner. A means-tested minimum benefit would simultaneously increase overall labour supply and reduce inequality, compared to the current system.

Joshua Aizenman, Yothin Jinjarak, Jungsuk Kim, Donghyun Park, 08 January 2016

Daron Acemoglu, Suresh Naidu, Pascual Restrepo, James Robinson, 23 May 2017

Gilles Duranton, Ejaz Ghani, Arti Grover Goswami, William Kerr, 27 May 2016

Branko Milanovic, 16 May 2017

The capital–income ratio continues to rise. This increases interpersonal inequality when three conditions are met (as they are in all rich economies today): the rate of return to capital outstrips that of income, income from capital is concentrated among the rich, and the income source that is less equally distributed is correlated with overall income. This column argues that the third condition is not inevitable, and that policies to share income from capital more equally would decrease overall inequality. We have tools to do this, but policymakers lack the political will.

Rui Luo, 14 May 2017

While the impact of modern technological change on the skill premium has been well explained, there has been no study of the evolution of the skill premium over the very long run. This column reveals that the skill premium in Western Europe declined between 1300 and 1600, and converged to a low and stable level afterwards. Growth and technological change, while stimulating economic development and the transition from a pre-modern era to modern era, reduced wage inequality between different working groups.

Don Fullerton, Nirupama Rao, 03 May 2017

In the 2012 US presidential election, Mitt Romney famously asserted that 47% of the population were long-term dependents of the government – ‘takers’, not ‘givers’ to the system. This column examines this claim using long-spanning household-level data. Even though many households find themselves not paying tax or receiving public benefits in at least some years, only a small fraction consistently pay no tax or consistently receive public transfers.

Ravi Kanbur, Andy Snell, 30 April 2017

Observed inequality has limitations for normative assessment, which raises the question of whether inequality measurement is redundant and should be replaced by the study of the underlying causes of inequality. This column argues that even in the context of the ‘process versus outcomes’ question, overall indices of inequality still maintain their relevance, but now as statistical tests of fairness.

Roberto Ezcurra, Andrés Rodríguez-Pose, 13 April 2017

Spatial inequality is understood as a function of geography or administrative planning, but its relation to ethnic segregation is less well understood. This column analyses this relationship using regional data for 71 countries with different levels of economic development. The degree of spatial concentration of ethnic groups is a robust and highly significant predictor of within-country income disparities. More ethnically segregated countries experience higher levels of spatial inequality and are thus more prone to conflict.

Enrico Rubolino, Daniel Waldenström, 13 April 2017

The link between tax progressivity and the income distribution is the subject of intense debate. This column presents new evidence from tax reforms during the 1980s and 1990s to examine how reduced progressivity affects top income shares. Reduced progressivity boosted top incomes, particularly for those in the top 0.1% of earners. Income tax changes are therefore a plausible candidate for explaining the recent surge in income inequality.

Daron Acemoglu, Pascual Restrepo, 10 April 2017

As robots and other computer-assisted technologies take over tasks previously performed by labour, there is increasing concern about the future of jobs and wages. This column discusses evidence that industrial robots reduced employment and wages between 1990 and 2007. Estimates suggest that an extra robot per 1,000 workers reduces the employment to population ratio by 0.18-0.34 percentage points and wages by 0.25-0.5%. This effect is distinct from the impacts of imports, the decline of routine jobs, offshoring, other types of IT capital, or the total capital stock. 

Andrea Guariso, Thorsten Rogall, 04 April 2017

There is a lively debate about the role of inequality as a trigger of ethnic conflicts. This column reports groundbreaking research into the effect of the amount of regional rainfall on crops, which is used to measure inequality between ethnic groups. Inequality caused by the weather's effect on crops has a large and significant impact on the prevalence of ethnic conflict. This effect is strongest when a lack of rainfall penalises ethnic groups with no access to power. 

Thomas Piketty, Emmanuel Saez, Gabriel Zucman, 29 March 2017

The rise of economic inequality is one of today’s most hotly debated issues. But a disconnect between the different data sets used to measure and understand inequality makes it hard to address important economic and policy questions. In this column, the authors highlight the findings from their attempt to create inequality statistics for the US that overcome the limitations of existing data by creating distributional national accounts.

Andrea Brandolini, 27 February 2017

Sir Tony Atkinson, the doyen of inequality economics, passed away in January. This column, by a longstanding friend and co-author, outlines his contributions to the analysis and measurement of inequality – and many other areas of economics, including taxation, social protection, and the welfare state. The ultimate goal of Atkinson’s research was to translate economic analysis into policy actions: economics is a tool for understanding the world and taking informed decisions on policies, but economists must strive to communicate their results beyond the narrow circles of decision-makers, making them accessible for public discussion.

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