Poverty and income inequality

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.

Raj Chetty, John Friedman, 18 April 2019

Using confidential data to publish statistics based on small samples is challenging due to privacy loss. This column introduces a simple method for dealing with this issue which adds noise to each statistic in proportion to its sensitivity to the addition or removal of a single observation from the data. The method generally outperforms widely used methods of disclosure limitation such as count-based cell suppression both in terms of privacy loss and statistical bias. As an illustration, the method is used to release estimates of social mobility by Census tract in the Opportunity Atlas. 

Eric Hanushek, Paul Peterson, Laura M. Talpey, Ludger Woessmann, 15 April 2019

For 50 years, anti-poverty government programmes in the US have focused on improving school outcomes for poor children. This column reports new evidence that, contrary to recent thinking that gaps in student achievement by socioeconomic status have increased over the years, the gaps have been essentially flat over the past half-century. New policies and new approaches seem called for if we wish to lessen these gaps.

Martin Ravallion, 15 April 2019

It is 50 years since the Sino-Malay race riots in Kuala Lumpur prompted a policy effort to reduce Malaysia’s longstanding ethnic inequalities. This column argues that while reduced ethnic/racial disparities in living standards has played an important role in the country's ability to manage overall relative inequality and in its impressive progress against poverty over the last 50 years, overall economic growth has been more important. However, the potential gains to poor Malaysians from progress toward ethnic equality do not appear to have been exhausted yet. 

Tito Boeri, Andrea Ichino, Enrico Moretti, Johanna Posch, 13 April 2019

In many European countries, wages are determined by collective bargaining agreements intended to improve wages and reduce inequality. This column compares the impact of different wage bargaining models in Italy, which has limited geographical wage differences in nominal terms and almost no relationship between local productivity and local nominal wages, and Germany, which has a tighter link between local wages and local productivity. The Italian system is successful at reducing nominal wage inequality, but creates costly geographic imbalances. If Italy were to adopt the German system, aggregate employment and earnings would increase by 11.04% and 7.45%, respectively. 

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