David Bloom, Klaus Prettner, 25 June 2020

Over the last decade there has been a tremendous progress in automation. Many tasks previously seen as un-automatable can now be performed without human labour, and the number of industrial robots in use has increased sharply. This column describes the recent trends in automation and argues that its principal effects are to increase output per capita at the expense of rising inequality. Advancing technologies have mainly replaced the routine tasks of low-skilled workers, while the incomes robots generate flow to wealthier capital owners. The current COVID-19 pandemic is likely to reinforce these trends, raising the need for a policy response.

Stefania Fabrizio, Vivian Malta, Marina M. Tavares, 20 June 2020

The COVID-19 crisis is depressing growth globally, and lockdown measures are causing widespread job losses. This column illustrates that women are amongst the worst affected. Women are vulnerable not only because of their jobs, but also because of gender inequalities within housework division, education, and health. There is an urgent need to support women, repair gender disparities aggravated by crisis, and to reduce women’s vulnerability going forward. Gender-responsive fiscal measures are viable tools that work in the interests of women, as well as supporting economic growth and reducing poverty and inequality.

Ken Mayhew, Samuel Wills, 18 June 2020

Inequality within most developed countries is higher today than it was 30 years ago. Growth in emerging economies has reduced inequality between nations, but the benefits have been unevenly spread within those economies. This column analyses what has happened, why we should care, and what can be done about inequality. Governments have not focused enough on pre-market policies that prevent inequality arising in the first place. Post-market interventions should be seen as too little, too late. Instead, we need a call-to-arms for governments to re-focus on the deep underlying drivers of inequality.

Juan C. Palomino, Juan Gabriel Rodríguez, Raquel Sebastian, 16 June 2020

Enforced social distancing and lockdown measures to contain COVID-19 restrict economic activity, especially among workers in non-essential jobs who cannot ‘telework’. These have implications for inequality and poverty. This column analyses the capacity of individuals in 29 European countries to work under lockdown and the potential impact of a two-month lockdown on wages and inequality levels. There will be substantial and uneven wage losses across the board and poverty will rise. Inequality within countries will worsen, as it will between countries although to a lesser extent.

Thomas Plümper, Eric Neumayer, 11 June 2020

Is Covid-19 a ‘rich man’s disease’, as many citizens in poorer countries believe it to be? This column descibes how in Germany, infections began with individuals returning from skiing holidays. In the first phase of the pandemic, infection rates were higher in richer areas and lower in more socially deprived districts. In the second phase, the ability to socially distance oneself mattered more – an ability that is itself socioeconomically stratified. Richer districts are now seeing fewer new infections, and the initial safety advantage of more socially deprived districts has disappeared.

Alina Kristin Bartscher, Moritz Kuhn, Moritz Schularick, 18 May 2020

Household debt-to-income has quadrupled in the US since WWII. This column presents historical evidence suggesting that debt-to-income ratios have risen most dramatically for middle-class households with low income growth. Middle-class households have increasingly tapped into rising housing wealth to finance spending in excess of income. Home-equity based borrowing accounts for 50% of the increase in US housing debt and turned the middle-class into the epicentre of financial fragility. 

R. Maria del Rio-Chanona, Penny Mealy, Anton Pichler, François Lafond, J. Doyne Farmer, 16 May 2020

Many researchers have studied the adverse impacts of the negative supply shock due to measures taken to combat the spread of COVID-19. This column provides estimates of occupation- and industry-specific effects of both the supply and the demand shock for the US. US GDP is predicted to decline by 22% compared to the pre-COVID-19 period, and 24% of US jobs are likely to be vulnerable. The adverse effects are further estimated to be strongest for low-wage workers who might face employment reductions of up to 42% while high-wage workers are estimated to experience a 7% decrease.

Asger Lau Andersen, Emil Toft Hansen, Niels Johannesen, Adam Sheridan, 15 May 2020

The COVID-19 pandemic has had drastic effects on consumer spending across the world. This column presents evidence based on bank account transaction data from Denmark showing that total card spending was reduced by 25% during the early phase of the crisis. The drop was mostly concentrated on goods and services whose supply is directly restricted by government interventions, suggesting a limited role for spillovers to non-restricted sectors through demand in the short term.

Davide Furceri, Prakash Loungani, Jonathan D. Ostry, Pietro Pizzuto, 08 May 2020

Major epidemics in this century have raised income inequality and hurt the employment prospects of people with low educational attainment, while scarcely affecting those with advanced degrees. This column argues that the COVID-19 pandemic could have similar distributional consequences unless this time is different and government policies end up being effective in raising boats more than yachts.

Leandro de la Escosura, Carlos Álvarez-Nogal, Carlos Santiago-Caballero, 07 May 2020

It is believed that living standards in world economies stayed roughly constant prior to 1800. This column presents data on Spanish population and economic development from 1277-1850 which challenges this view. Population and economic growth are found to evolve simultaneously, contradicting the Malthusian view. Spain was a frontier economy within Europe that, after a drop in living standards after the Black Death, grew steadily until the 1570s, when its path diverged from the rest of Europe. 

Morten Bennedsen, Elena Simintzi, Margarita Tsoutsoura, Daniel Wolfenzon, 07 May 2020

Many countries are introducing mandatory wage transparency to address the seemingly intractable gender wage gap, but evidence of its effects on gender pay disparities and firm outcomes has, to date, been limited. To examine the benefits and costs of such policies, this column analyses the wages of firms prior to and following the introduction of Denmark’s 2006 Act on Gender Specific Pay Statistics. Mandatory transparency legislation reduced gender pay disparity, primarily by slowing down the growth of men's wages.

Dimitris K. Chronopoulos, Marcel Lukas, John O.S. Wilson, 06 May 2020

Since the first COVID-19 cases were reported in January 2020, the UK government has introduced successive public health measures, culminating in late March 2020 with enforced closures of non-essential businesses and social distancing. These measures are significantly affecting UK household incomes and expenditures. This column exploits a large anonymised transaction-level dataset covering Great Britain to examine real-time consumer spending responses to the COVID-19 pandemic and related public policy measures. While there are differences by age, gender, and income level, overall consumer spending declined as the government lockdown becames imminent and has continued to decline since.

Henry Overman, 22 April 2020

The economic crisis caused by COVID-19 will play out unequally across areas. Unfortunately, the unusual nature of this crisis makes its local impacts hard to predict. This complicates attempts to formulate appropriate area-based policy responses. This column focuses on the UK and argues that, in the short run, we will need to target immediate support through existing mechanisms to reach people who are most vulnerable to the impacts of the current crisis. Doing this will also help the most vulnerable communities where these people live.

Mark Stabile, Bénédicte Apouey, Isabelle Solal, 01 April 2020

While some countries have provided assistance to workers unable to perform tasks from home during the COVID-19 pandemic, certain categories of workers tend to fall through the cracks of these programmes. This column reports the findings of a survey of precarious workers in France, including gig economy workers such food delivery bikers. Traditional gig economy workers with incomes under €1,000 a month were more likely to keep working despite the highly elevated health risk of doing so, suggesting that the support in place is leaving some low-income workers exposed.

Nicolas Woloszko, Orsetta Causa, 31 March 2020

Rising house prices are causing a housing affordability crisis in many countries, but at the same time they are increasing homeowners’ wealth. Governments are faced with the challenge to encourage households to build up housing wealth while also fostering access to good-quality affordable housing. This column shows that, across OECD countries, those countries with higher homeownership rates display much lower wealth inequality, but argues that encouraging homeownership will not help low- and middle-income families accumulate wealth and are likely to conflict with other important policy objectives.

Christian Bayer, Benjamin Born, Ralph Luetticke, 26 February 2020

How much does inequality matter for the business cycle and vice versa? This column explores the two-way relationship using a heterogeneous agent New Keynesian model estimated on both the macro and micro data. Although adding data on wealth and income inequality may not materially change the estimated shocks driving the US business cycle, the estimated business cycle shocks themselves are useful for explaining the evolution of US wealth and income inequality from the 1950s to today.

Piritta Sorsa, Jens Arnold, Paula Garda, 13 January 2020

Economic growth in Latin America has been persistently lower and more erratic than the emerging economies of Asia, largely due to low productivity borne out of both weak competition and a large informal economy. This column analyses the various factors that have caused these conditions to exist in several Latin American countries, and how policies to counteract them have fared. For significant progress, a detailed strategy of simplifying regulations, easing administrative burdens, encouraging market entry, and reducing trade barriers is required to formalise workers and encourage market competition.

Lubos Pastor, Pietro Veronesi, 12 December 2019

Economic anxiety and insecurity are often cited as drivers of populism, so why has populism emerged over the past few years in rich countries and in good times? This column, part of the Vox debate on the topic, argues that income inequality plays a role. When the economy is strong, everyone fares well but the rich fare especially well, fuelling inequality and resentment. Populism in the form of anti-globalisation may reduce everyone’s consumption, but it affects the rich disproportionately and thus appeals to many voters in richer countries. In poorer countries, however, voters are less willing to give up consumption for equality.

Neil Cummins, 08 December 2019

Sharp declines in the concentration of declared wealth occurred across Europe and the US during the 20th century. But the rich may have been hiding much of their wealth. This column introduces a new method to measure this hidden wealth, in any form. It finds that between 1920 and 1992, English elites concealed 20-32% of their wealth. Accounting for hidden wealth eliminates one-third of the observed decline of top 10% wealth share over the past century.

Sebastian Edwards, 30 November 2019

In a few decades, Chile experienced dramatic economic growth and the fastest reduction of inequality in the region. Yet, many Chilean citizens feel that inequality has greatly increased. Such feelings of 'malestar' triggered the violent social unrest of October 2019. This paper explains this seeming paradox by differentiating ‘vertical’ (income) inequality from ‘horizontal’ (social) inequality. It argues that the neoliberalism that created Chile’s economic growth is no longer effective and that Chile may be headed towards adopting a welfare state model.

Pages

Vox eBooks

Events

CEPR Policy Research