Guido Porto, Bob Rijkers, 20 May 2022

This week António Guterres, secretary-general of the UN, warned that the war in Ukraine would tip tens of millions into food insecurity. Guido Porto and Bob Rijkers tell Tim Phillips about who suffers and how much from food price inflation.

Luigi Guiso, Luigi Pistaferri, 14 May 2022

The literature on assortative mating has largely focused on whether children of wealthy parents tend to marry children of similarly wealthy parents. Using data from Norway, this column shows that people tend to match based on their own pre-marriage wealth, not their parent’s wealth, and that individuals also match based on their personal returns to wealth. Among wealthy couples, the partner with the highest pre-marriage return tends to manage the household’s assets, allowing the households to grow their assets even faster over time and boosting wealth concentration. 

Torben M Andersen, Joydeep Bhattacharya, Anna Grodecka-Messi, Katja Mann, 05 May 2022

Retirement saving is at the centre of the debate on rising income and wealth inequality. This column studies the role of the pension system in wealth accumulation and distribution in Denmark. The authors find that a pension reform in the late 1980s increased the savings rate and aggregate pension assets significantly by introducing mandated funded pensions. Moreover, it has had an equalising effect on the wealth distribution. The findings illustrate the importance of pension system design for the level and distribution of wealth. 

Richard Blundell, 22 April 2022

Governments are desperate to create innovation hubs or attract tech companies to kickstart economic growth, but that creates winners and losers. Richard Blundell tells Tim Phillips how policy can balance the impact of innovation on inequality and create policies so that creative destruction and social mobility can go hand-in-hand.

Read more about the research behind this podcast and download the free DP:
Blundell, R, Jaravel, X and Toivanen, O. 2022. 'Inequality and Creative Destruction '. CEPR

Nicola Fuchs-Schündeln, 05 April 2022

On 7 April the 75th EP panel will discuss the long-term economic effects of lost learning due to Covid-19. What do we now know about the impact of closed schools, and what action policymakers can take to help this Covid generation make up for lost time?

For more about the upcoming panel meeting and to register for the online policy session visit: https://www.economic-policy.org/. 

Erhan Artuc, Guillermo Falcone, Guido Porto, Bob Rijkers, 01 April 2022

The conflict in Ukraine has led to a surge in food prices, particularly wheat and corn. This column uses a newly developed toolkit to analyse the welfare impacts of food price inflation on households in developing countries. Average household welfare decreases in 43 of 53 countries in the sample, with an average real income loss of -1.5%. This impact varies substantially both across and within countries, with poorer households suffering systematically larger welfare losses. Protracted price increases will have long-term consequences for prosperity in many of these countries, exacerbating issues of poverty and inequality.

Olivier Blanchard, Jean Tirole, 21 March 2022

A report generated by a commission of 24 distinguished economists focuses on three structural challenges for the global economy. The column sets out some of the conclusions. While the challenges of climate change, inequality and demographic change are significant, solutions – though sometimes expensive or unpalatable – exist.

Don Fullerton, Arik Levinson, 15 February 2022

Guido Alfani, Victoria Gierok, Felix Schaff, 28 January 2022

New evidence is transforming the way we look at long-term trends in economic inequality. This column reconstructs wealth inequality in the German area over five centuries. The significant declines in inequality triggered by the Black Death and again by the Thirty Years’ War of 1618–1648 and the plague that followed provide strong support for the potential levelling effects of catastrophes. However, the much lower mortality rate for Covid-19 suggests we can expect inequality to increase, not to decline, as a consequence of the pandemic.

Philippe Aghion, Reda Cherif, Fuad Hasanov, 20 January 2022

Rising inequality and firms’ market power pose challenges to the aims of inclusive growth and shared prosperity. Nevertheless, growth and equity need not be mutually exclusive. This column argues that economic dynamism is crucial for achieving sustained growth and more equal market outcomes. It shows that countries that experienced faster growth over the last four decades have lower market inequality in the 2010s. Policy should be aimed at supporting sophisticated export industries, fostering innovation and creative destruction, and promoting competition. 

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.

Nishant Yonzan, Branko Milanovic, Salvatore Morelli, Janet Gornick, 05 November 2021

Household survey data and tax data both suffer from measurement concerns at the top of the income distribution. This column analyses data from the US to investigate when and why the two data sources diverge. The authors conclude that the source of the divergence lies in the measurement of non-labour income as tax rules change over time.

Natalie Bau, Gaurav Khanna, Corinne Low, Manisha Shah, Sreyashi Sharmin, Alessandra Voena, 22 October 2021

The COVID-19 pandemic represents a twin health and economic shock with devastating effects, particularly in low-income settings. This column uses a large phone survey and leverages the geographical variation in India's containment policies to examine how the pandemic and its containment policies affect women’s wellbeing. The authors find that stricter containment policies, while potentially crucial to stem the spread of COVID-19 cases, are associated with worse female mental health and increased food insecurity, particularly for the most vulnerable women.

Jan Eeckhout, Christoph Hedtrich, Roberto Pinheiro, 16 October 2021

The adoption of information technology can cause polarisation in the labour market via the displacement of routine cognitive jobs. This column uses data on over 200,000 firms in the US from 1990 to 2015 to show that the labour savings from IT are largest in big cities and metropolitan areas, where wages are higher, so urban firms have the biggest incentives to invest in these technologies. This in turn leads to the polarisation of occupations across geography and accounts for the rise in wage inequality within cities.

Seth G. Benzell, Victor Yifan Ye, 12 October 2021

Despite clear economic benefits of new digital technologies, slow median wage growth has led many to worry that these new technologies are failing to deliver for the average worker. This column develops a new model of global automation and technological change to study the long-term consequences of these trends. It finds that automation can boost output and growth, but these benefits are not equally distributed across or within regions. Nevertheless, in developed countries smart fiscal policy, such as universal basic income, can make new technologies a win-win for all age and skill groups. 

Marcin Bielecki, Michał Brzoza-Brzezina, Marcin Kolasa, 12 October 2021

By boosting labor incomes and asset prices, a monetary easing is often believed to benefit the vast majority of households. This column argues that this intuition is misleading, because the effect of asset price changes for households depends not just on asset holdings, but on their maturity structure, which is largely driven by life-cycle motives. A typical monetary policy easing redistributes welfare from older to younger generations. Moreover, the resulting asset price appreciation is harmful for households that accumulate housing and save for retirement.

Andrea Asoni, Andrea Gilli, Mauro Gilli, Tino Sanandaji, 19 September 2021

There is a common perception that the US military predominantly recruits individuals from the most disadvantaged socioeconomic backgrounds with limited other career options. This column argues that this is no longer the case. Skill-biased technological change has led the US military to recruit more higher-skilled personnel since the 1990s, and while in 1979 the probability of joining the military was clearly higher for those with lower-than-average family income, for the 1997 cohort the probability was much more evenly distributed.

Ethan Ilzetzki, 18 August 2021

By most measures, income inequality has increased in the UK in the past several decades. The July 2021 CfM survey asked the members of its UK panel to evaluate the impact of central banks on inequality and whether the Bank of England should consider income and wealth distribution in its monetary policy decisions. The majority the panel thinks monetary policy has only a small impact on wealth and income inequality. A larger majority of nearly 90% of the panel believes that inequality should play a minimal role or no role in the Bank of England’s monetary policy decisions.

Nikolay Angelov, Daniel Waldenström, 13 August 2021

The negative economic impact of the Covid-19 pandemic has received much attention, but less is known about its distributional consequences. This column presents new evidence on the pandemic’s inequality effects in Sweden using data on earnings and individual take-up of government Covid-19 support. The results show that income inequality increased during the pandemic, mostly due to layoffs and fewer working hours among low-income, part-time employees. The government’s support policies significantly dampened the increase in inequality but did not reverse it.

Martin Ravallion, 03 August 2021

Economists have long debated the most effective metrics for measuring poverty and inequality. This column presents analysis of the relative importance of three prominent macroeconomic indicators – the rate of unemployment, the inflation rate, and the growth rate of GDP per capita. Using evidence from the US, the author argues that higher unemployment rates unambiguously increase poverty measures, but that inflation matters more in the middle and upper-middle of the distribution than in the tails.

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