Roberto Iacono, Elisa Palagi, 27 February 2021

A crucial element in the study of wealth inequality is the difference between the rate of return and the growth rate of income. However, the focus on these measures at the aggregate level belies important heterogeneities along the wealth distribution. This column uses rich micro-data from Norway to show that wealthy households enjoy higher rates of return relative to growth, while the opposite is true for poorer household and the lower-middle-income class. It discusses policy implications of these findings for capital and wealth taxation in order to curb the rise of inequality. 

Alex Chernoff, Casey Warman, 02 February 2021

COVID-19 may accelerate the automation of jobs, as employers invest in technology to safeguard against pandemics. This column uses survey data from the US to show that women with medium to low levels of wages and education are at the highest risk of COVID-induced automation.

Pierre Dubois, Yassine Lefouili, Stephane Straub, 30 January 2021

Patients in the developing world often face prices for essential medicines far in excess of international reference levels, even if those drugs have lost patent protection. This column presents evidence from seven low- and middle-income countries with diverse drug procurement systems to assess the effect of centralised procurement on drug prices. The results of the study highlight that centralised procurement of drugs by the public sector leads to lower prices, but that the induced price reduction is smaller when the supply side is more concentrated.

Branko Milanovic, 29 January 2021

In classical capitalism, the rich earn their money from capital while the poor sell the value of their labour. In which countries is that still true, and how does it affect the gap between rich and poor? Branko Milanovic tells Tim Phillips about a new way in which we can think about inequality.

Pedro Carneiro, Italo Lopez Garcia, Kjell G. Salvanes, Emma Tominey, 24 January 2021

Parents’ income can affect a child’s earnings later in life but most empirical studies of intergenerational mobility collapse the childhood years into a single period. This column uses administrative data of all children born in Norway 1971–1980 to examine the relationship between adult outcomes of children and the timing of parental income over three periods of childhood: early (ages 0–5), middle (ages 6–11), and late (ages 12–17). Child success increases in households where parents’ income is higher in either early childhood or during adolescence. A balanced level of income across early childhood and adolescence may also improve the child’s success.

Barry Eichengreen, Balazs Csonto, Asmaa El-Ganainy, Zsoka Koczan, 14 January 2021

Global inequality has fallen in recent decades, but within-country inequality has risen in a significant number of national economies during the same period.  This column identifies the channels through which financial globalisation accentuates inequality and suggests how these could be mitigated by accompanying policies.  

Marcela Escobari, Eduardo Levy Yeyati, 07 January 2021

COVID-19’s impact on welfare, as well as its legacy, will likely differ significantly between North and South America because of differences in the labour market structure across the two continents. This column highlights informal labour markets in developing economies of South America as a potential explanation for the larger and more persistent impact of the pandemic in the South as compared to North America. It suggests targeted training and new regulation to mitigate the precariousness of the workforce in these economies.

Augusto Cerqua, Marco Letta, 18 December 2020

There is widespread concern about the toll of the pandemic on local economies, but little causal evidence to assess its real costs. This column presents an impact evaluation of the local economic effects of the COVID-19 crisis in Italy, based on a counterfactual application of machine learning algorithms. It documents that, to date, impacts on employment and firms have been dramatically uneven across the Italian territory and spatially uncorrelated with the epidemiological pattern of the first wave. It shows that this heterogeneity is associated with sectoral specialisation, exposure to social aggregation risks, and pre-existing labour market fragilities. Finally, it argues that such diverging local trajectories call for a place-based approach in the policy response to the crisis.

Kristoffer Balle Hvidberg, Claus Thustrup Kreiner, Stefanie Stantcheva, 16 December 2020

How individuals understand their own social position – and how that understanding shapes their stance on inequality more broadly – are questions of longstanding concern to social scientists. This column uses a unique combination of data to address these questions, linking a large-scale Danish survey that elicited perceptions of income and fairness to detailed administrative data on true income positions and life histories. It finds that individuals are well informed about their own social positions, and that their beliefs about fairness and unequal outcomes correlate more closely to that position than their political views do.

Anna McDougall, George Orlov, Douglas McKee, 10 December 2020

Many higher learning institutions have shifted to remote learning in response to the COVID-19 pandemic. Although research has found that online classes can be just as effective as in-person classes, there is evidence that suggests disadvantaged students may perform relatively worse. This column compares student performance on a set of standard assessments at four PhD-granting institutions in the US before and after the switch to online classes. It finds little evidence that disadvantaged groups were further disadvantaged by the pandemic in their college learning. Instructor experience with online teaching and the use of active-learning techniques have a positive effect on student outcomes.

Marco Ranaldi, Branko Milanovic, 03 December 2020

Similar levels of income inequality may coexist with completely different distributions of capital and labor incomes. This column introduces a new measure of compositional inequality, allowing the authors to distinguish between different capitalist societies. The analysis suggests that Latin America and India are rigid ‘class-based’ societies, whereas in most of Western European and North American economies (as well as in Japan and China), the split between capitalists and workers is less sharp and inequality is moderate or low. Nordic countries are ‘class-based’ yet fairly equal. Taiwan and Slovakia are closest to classless and low inequality societies. 

Antoine Bozio, Bertrand Garbinti, Jonathan Goupille-Lebret, Malka Guillot, Thomas Piketty, 18 November 2020

How much can redistribution policies account for long-run changes in inequality? This column reveals that the reduction of inequality implied by redistribution is significant in France and the US and increased throughout the entire 20th century, but pre-tax income inequality appears to be the main factor accounting for the differential levels and trends in the two countries. These findings suggest that policy discussions on inequality should pay more attention to policies affecting pre-tax inequality and should not focus exclusively on redistribution.

Margareta Drzeniek, Sheana Tambourgi, Ilaria Marchese, 12 November 2020

COVID-19 is accelerating structural transformations, notably towards more digitalised and more automated economies. This column presents a COVID-19 economic recovery index which considers the extent to which a country is exposed to major health effects from COVID-19, the degree to which a country’s economy will be affected by the crisis, and a country’s capacity to recover and rebuild to pre-COVID-19 levels. To guide their economies out of this crisis and to ready them for the coming transformation, governments need to restore trade flows, manage the risks of slowing global economic convergence, and actively prepare for accelerating economic transformation.

Sander Wagner, Diederik Boertien, Mette Gørtz, 01 November 2020

Couple formation plays an important role in affecting both the extent to which wealth remains concentrated from one generation to the next and in subsequently shaping wealth inequalities. This column uses administrative data from Denmark to study partner selection based on parental wealth. It finds a relatively low correlation in partners' parental wealth overall, but a high degree of homogamy at the top of the parental wealth distribution. In addition, it finds that homogamy based on parental wealth has increased steadily during the period 1980-2013. 

João Tovar Jalles, Luiz de Mello, 22 October 2020

Widening income disparities and slow productivity growth in many countries have rekindled interest in the policies that can deliver strong and equitable growth in output and living standards. This column presents a chronology of inclusive growth episodes, defined as increases in GDP per capita without a concomitant deterioration in the distribution of household disposable income. These episodes are more likely to occur where human capital is high, tax-benefit systems are more redistributive, productivity grows more rapidly, and labour force participation is high. Trade openness and a range of institutional factors, including political system durability and electoral regimes, also matter.

Guido Alfani, 15 October 2020

The relationship between pandemics and inequality is of significant interest at the moment. The Black Death in the 14th century is one salient example of a pandemic which dramatically decreased wealth inequality, but this column argues that the Black Death is exceptional in this respect. Pandemics in subsequent centuries have failed to significantly reduce inequality, due to different institutional environments and labour market effects. This evidence suggests that inequality and poverty are likely to increase in the aftermath of the Covid-19 crisis.

Sergio Galletta, Tommaso Giommoni, 03 October 2020

The COVID-19 outbreak is expected to increase income inequality around the world as the poorer are likely to be hit harder by the pandemic’s negative economic impact. Focusing on Italy, this column argues that such distributional consequences also appeared during the 1918 influenza pandemic. Income inequality became higher in areas more afflicted by the flu pandemic, and this is mostly explained by a reduction in the share of income held by poorer people. This effect seems to persist even a century after the pandemic.

Jose Maria Barrero, Nicholas Bloom, Steven Davis, 23 September 2020

The COVID-19 pandemic triggered a sudden, massive shift around the world to working from home. While there is great concern how this will affect inequality and how the economy will adjust, the shift has also saved billions of hours of commuting time in the US alone. Drawing on original surveys, this column estimates that the shift to working from home lowers commuting time among Americans by more than 60 million hours per workday. Americans devote about a third of the time savings to their primary jobs and about 60% to other work activities, including household chores and childcare. The allocation of time savings differs substantially by education group and between persons with and without children at home.

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.

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