Roberto Iacono, Marco Ranaldi, 02 November 2020

The uneven distribution of wealth in society is commonly perceived as a matter of concern per se for inequality-averse policymakers. However, being wealth-poor or wealth-rich is also correlated with outcomes in the labour market. This column examines how wages and unemployment vary across the relative distribution of personal wealth in Norway, focusing on the wage-to-unemployment ratio across the different percentiles of the wealth distribution. It finds that wealth-poor individuals cannot escape low labour incomes regardless of the unemployment rate they face, while the unemployment elasticity of wages is substantially higher for wealth-rich individuals.

Ravi Kanbur, 21 September 2020

From the public discourse, it seems clear that we are living in an age of rising inequality. However, common measures of income and consumption inequality disguise a more nuanced pattern of inequality change across the world. This column argues that inequality within countries has not been rising everywhere and that inequality between countries has decreased. At the same time, technological progress is increasingly displacing basic labour in favour of skilled labour and capital, across borders, and widening the wage gap. The overall effect is unclear. National policies to mitigate inequality are needed but, in the absence of international cooperation, are constrained by cross-border spillovers.

Brian Nolan, Juan C. Palomino, Philippe Van Kerm, Salvatore Morelli, 19 September 2020

Whether and how much intergenerational transfers contribute to wealth inequality is still subject to debate. This column analyses household survey data on inheritance and gifts inter vivos in France, Germany, Great Britain, Ireland, Italy, Spain, and the US to relate current household wealth levels and inequality to the receipt of intergenerational wealth transfers. In these countries, large transfers increase overall wealth inequality. Strengthening taxation capacity and instating lifetime capital acquisitions tax for gifts and inheritances may help counter the dis-equalising effect of intergenerational transfers.

Walter Scheidel, 02 September 2019

World War II sharply reduced income and wealth inequality in many countries. This column, part of a Vox debate on the economics of WWII, describes how various factors converged to produce this outcome. Mass mobilisation raised demand for labour and reduced skill premiums, extremely high marginal tax rates cut into elite incomes and fortunes, aggressive government intervention curtailed corporate and investment profits and sought to protect workers, consumers, and renters. Returns of capital fell as international markets suffered interruptions and physical assets risked confiscation or destruction. Communist regimes expanded their reach. In market economies, the war experience promoted reforms regarding social welfare, unionisation and taxation that sustained several decades of greater equality.

Philipp Ager, Leah Boustan, Katherine Eriksson, 01 June 2019

One striking feature of many underdeveloped societies is that economic power is concentrated in the hands of very small powerful elites. This column explores why some elites show remarkable persistence, even after major economic disruptions, using the American Civil War’s effect on the Southern states. Analysis of census data shows that when the abolition of slavery threatened their economic status, Southern elites invested in their social networks, which helped them to recoup their losses fairly quickly.

Thomas Blanchet, Lucas Chancel, Amory Gethin, 22 April 2019

Despite the growing importance of inequalities in policy debates, it is still difficult to compare inequality levels across European countries and to tell how European growth has been shared across income groups. This column draws on new evidence combining surveys, tax data, and national accounts to document a rise in income inequality in most European countries between 1980 and 2017. It finds that income disparities on the old continent have increased less than in the US and shows that this is essentially due to ‘predistribution’ policies.

Michael Brei, Giovanni Ferri, Leonardo Gambacorta, 07 March 2019

There is mounting evidence that income inequality and disparities in wealth have been rising in advanced economies in the recent decades. Using data on advanced and emerging economies, this column investigates the link between an economy's financial structure – that is, the mix of bank-provided versus market-provided funds – and income inequality. Results show that the relationship is not monotonic. More finance reduces income inequality up to a point, but beyond that point inequality rises, especially if finance is expanded via market-based financing.

Edward Wolff, 23 December 2018

Unlike income inequality, wealth inequality along racial lines in the US has received relatively little attention. This column presents new evidence on the changing landscape of relative wealth among whites, blacks, and Hispanics between 1983 and 2016. Using an augmented measure of wealth, it highlights how cuts to social security will disproportionately affect minorities.

Paul Hufe, Ravi Kanbur, Andreas Peichl, 28 September 2018

Rising income and wealth inequality have come into sharp focus since the Global Crisis. Using US and European data, this column explores the factors contributing to unfair inequality, focusing on equality of opportunity and freedom from poverty. The results show that unfair inequality is greater in the US than anywhere in Europe, and that it has been increasing over time. The findings also show that relying solely on measures of equality of opportunity will severely underestimate unfair inequality. 

Facundo Alvaredo, Lydia Assouad, Thomas Piketty, 13 August 2018

Survey estimates suggest that inequality in the Middle East is not particularly high despite considerable political conflict. This column uses new ‘distributional national accounts’ data to show that the Middle East is in fact the most unequal region in the world, with both enormous inequality between countries and large inequality within countries. The results emphasise the need to develop mechanisms of regional redistribution and to increase transparency on income and wealth data.

Moritz Kuhn, Moritz Schularick, Ulrike Steins, 09 August 2018

Recent work examining the evolution of the wealth distribution has tended to not paid much attention to the role of asset prices. This column uses a new US dataset to explore the role that asset price movements have in the US wealth distribution. Asset prices matter because portfolio composition differs systematically along the wealth distribution. The data further show that no progress has been made in reducing wealth inequalities between white and black households over the past 70 years. 

Juan Dolado, Gergo Motyovszki, Evi Pappa, 17 May 2018

There is ongoing debate over the welfare implications of the unorthodox measures adopted by central banks in the wake of the Global Crisis. Using US data, this column explores the implications of monetary policy for income and wealth inequality. Unexpected monetary expansions are found to increase inequality between high- and low-skilled workers. In terms of stabilising the economy, strict inflation targeting is found to be the most successful policy.

Orsetta Causa, Mikkel Hermansen, 23 March 2018

Growing wealth inequality has become a key concern for economists, and tackling it requires a deep understanding of how tax and transfer systems affect the income distribution. Using OECD data, this column argues that taxes and transfers are less effective at reducing inequality today than they were in the mid-1990s. This drop in effectiveness has largely been driven by declining cash transfers, with a smaller, more heterogeneous role for personal income taxes.

Joan R. Rosés, Nikolaus Wolf, 14 March 2018

A recent literature has explored growing personal wealth inequality in countries around the world. This column explores the widening wealth gap between regions and across states in Europe. Using data going back to 1900, it shows that regional convergence ended around 1980 and the gap has been growing since then, with capital regions and declining industrial regions at the two extremes. This rise in regional inequality, combined with rising personal inequality, has played a significant role in the recent populist backlash.

Anna Stansbury, Lawrence H. Summers, 20 February 2018

Since 1973, there has been divergence between labour productivity and the typical worker’s pay in the US as productivity has continued to grow strongly and growth in average compensation has slowed substantially. This column explores the causes and implications of this trend. Productivity growth appears to have continued to push workers’ wages up, with other factors to blame for the divergence. The evidence casts doubt on the idea that rapid technological progress is the primary driver here, suggesting rather that institutional and structural factors are to blame.

Michael Bar, Moshe Hazan, Oksana Leukhina, David Weiss, Hosny Zoabi, 13 January 2018

Over recent decades, the trend for high-skilled, career-focused women to have fewer children, if any at all, has reversed. Using US data, this column shows that rising wage inequality is behind the reversal. Greater income inequality enables high-income families to outsource household production to lower-income people. Changes to minimum wage laws are thus likely to affect the fertility and career decisions of the rich.

Gene Amromin, Mariacristina De Nardi, Karl Schulze, 04 January 2018

A widening gap between rich and poor has been extensively documented for many countries and economies. This column explores how the wealth gap affects output and consumption changes in response to aggregate shocks. Lower- and higher-wealth households face different borrowing constraints, and have different marginal propensities to consume. Different levels of access to financial liquidity thus play a major role in the overall consumption dynamics during an economic downturn.

Trevor Burnard, Laura Panza, Jeffrey Williamson, 06 December 2017

Jamaica was considered to be exceptionally rich in the 18th century. Modern historians have tended to perpetuate this idea. This column uses novel methods to shed new light on living standards and inequality in colonial Jamaica. While the country was one of the most expensive places on the planet at the time, this wealth rested in the hands a very small white, slave-owning elite. The rest of the populace, many in slavery, lived at the very edge of subsistence.

Juergen Braunstein, Marion Laboure, 11 November 2017

Despite specialised press coverage, little is known about the potential wider socioeconomic implications of digital wealth management solutions. This column examines how ‘robo-advisors’ offer an opportunity to democratise finance and decrease wealth inequality. These algorithmic investment advisors stand to disrupt the wealth management sector through their ‘low-cost, accessible to most’ business models. However, the entrance of traditional wealth managers into the robo-advisor market could threaten this disruption.

Jorge Luis García, James Heckman, Duncan Ermini Leaf, María Prados, 25 August 2017

The costs and benefits of early childcare for working women and their children are hotly debated. This column explores the long-term benefits and costs of a programme in the US providing high-quality childcare services for disadvantaged families. The programme has a two-generation impact, improving mothers’ labour income, work experience, and education, as well as outcomes for the children. The results also suggest that the benefits of high-quality compared to low-quality formal care are higher for boys than for girls. Overall, the benefits more than recoup the costs.

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