Poverty and income inequality

Majed Dodin, Sebastian Findeisen, Lukas Henkel, Dominik Sachs, Paul Schüle, 24 December 2021

According to the OECD, social mobility in Germany is lower than in most other developed economies, reigniting a debate on equality of opportunity and shortcomings of the education system. This column discusses how census data can be used to obtain high quality mobility statistics for Germany. Using the Abitur educational qualification as a measure of opportunity, it suggests that relative mobility has remained constant for recent birth cohorts but points to substantial geographic variation in mobility measures across regions in the country.

John List, Julie Pernaudet, Dana Suskind, 12 December 2021

Rising educational and income inequalities have been documented in nearly every corner of the earth, with associated disparities in parental investments in children. This column reports the results of two field experiments that reveal how shifting parents’ beliefs about the role of parental inputs in child development can lead to higher parental investments and be a pathway to reducing socioeconomic gaps in children’s skills.

Henning Hermes, Philipp Lergetporer, Frauke Peter, Simon Wiederhold, 07 December 2021

In many countries, children from families with lower socioeconomic status are less likely than those from higher socioeconomic status families to attend early childcare programmes. This column presents findings from a field experiment in Germany demonstrating that disadvantaged families have difficulties navigating the complex childcare application process, and providing information and personal assistance for applications can substantially reduce the socioeconomic gap in early childcare enrolment. To promote educational equality, policymakers should alleviate behavioural barriers to childcare and other formally non-selective social programmes.

Daniel Waldenström, 17 November 2021

Wealth inequality has attracted considerable attention in recent years. This column presents new historical evidence that revises earlier results and reveals long-term patterns. A key finding is that wealth has changed in nature over the past century: once held by the elite, it is now widely held in the form of housing and pension savings. These changes appear to account for the redistribution of wealth over the last century and the fact that its concentration has remained relatively low in more recent decades despite rapid increases in aggregate wealth.

Martin Ravallion, Shaohua Chen, 15 November 2021

China’s political leadership recently committed to expanding the proportion of middle-income groups to create a less polarised, and more ‘olive-shaped’, distribution of wealth. This column considers the potential trade-offs between reducing income polarisation and other goals, including poverty reduction. An obvious concern is how the process of economic growth impacts the extent of polarisation, but the country’s historical record does not point to any serious trade-offs going forward, including with economic growth, poverty reduction, and overall social welfare.  However, potential trade-offs would need to be considered further in the context of specific policy efforts, such as expanding social service coverage in rural areas.

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