CAUSES AND CONSEQUENCES OF GROWING INEQUALITY and what can be done about it

Size: px
Start display at page:

Download "CAUSES AND CONSEQUENCES OF GROWING INEQUALITY and what can be done about it"

Transcription

1 THE FOURTH ANNUAL OXFORD FULBRIGHT DISTINGUISHED LECTURE ON INTERNATIONAL RELATIONS CAUSES AND CONSEQUENCES OF GROWING INEQUALITY and what can be done about it Professor Joseph E. Stiglitz Friday 23 May 2014 Hosted by the University of Oxford in association with the US-UK Fulbright Commission, the Embassy of the United States of America, Pembroke College and the Lois Roth Endowment Pembroke College Embassy of the United States of America, London

2 I. Inequality has been growing within most countries around the world But the level of inequality differs markedly And there are some countries in which inequality is decreasing Economic forces are global, affecting similarly situated countries similarly Differences in outcomes suggests that the level of inequality is greatly affected by policy and politics US has highest level of inequality among advanced economies Countries that have emulated US model are seeing increases in inequality

3 Increase in share of top 1%: Piketty and Saez data Top 1% Income Share % Top 1% US Pre-Tax Income Share, % 15% 10% 5% 0% T. Piketty and E. Saez, "Income Inequality in the United States, " with Thomas Piketty, Quarterly Journal of Economics, 118(1), 2003:1-39, updated to2011. Series based on pre-tax cash income including realized capital gains and exluding government transfers.

4 Increase in share of top 1%: Piketty and Saez data Top 1% of U.S. income earners take home 22.5% of income Late 2000s and early 2010s highest levels since before Great Depression Top 0.1% take home 11.3% of income Top 0.01% take home 5.5% of income

5 Stagnation: U.S. median household income (constant 2012 US$) 60,000 55,000 50,000 45, : $51,017 40,000 35,000 30,000

6 Decline in median income of U.S. full-time male worker Median income of a full-time male worker lower than 4 decades ago Median income of a full-time male worker with only a high school education 47% below 4 decades ago Low labor force participation rate of 62.8% -- lowest since 1978

7 Decline in median income of full-time male worker Real median income of full-time male workers, ,000 50,000 45,000 40,000 35,000 30,000 Real median income of full-time male workers

8 Labor force participation at 1978 level

9 Increasing gap between productivity and wages Source: Washington Post citing data from the Bureau of Labor Statistics and from the Heritage Foundation.

10 Disparity between top and rest shows that trickle-down economics doesn t work Never was good theory, no evidence behind trickle-down economics Old version: need to give more money to top to enhance savings Modern version: need to give more money to top because they are job creators

11 Recession made matters worse Those at the bottom hurt thrice over Directly by unemployment Shifting distribution of income Cutbacks in public services Again, it s politics and policies: how we responded to the crisis made matters worse

12 Recession made matters worse In US, 95% of increase in income went to upper 1% between Median wealth fell by 40%, back to level of early 90 s Poverty is up

13 Many dimensions to inequality Income Wealth Health Greater in US than other advanced countries, partly because of lack of access to health care But evidence that inequality may even have adverse effect on top Exposure to environmental hazards Access to justice In US, treatment of homeowners, bankers in mortgage crisis (where homeowners who owed no money were thrown out of their homes, but bankers who lied to court were not prosecuted) raises questions about if the US can be said to have a rule of law Inequalities in many of these areas are greater than in income

14 Many aspects of inequality More of income, wealth going to the top Hollowing out of the middle class in many advanced countries More people in tails of distribution Increases in poverty in some advanced countries Can t summarize income distribution in a single number But whatever way one looks at it, things are getting worse in most countries

15 This is even true of the so-called successful countries In Germany, from mid 1990s to 2008 the bottom three deciles showed negative growth in real disposable income

16 Inequality of opportunity For most people, even more important than equality of outcomes Large differences among countries: Many advanced countries do much more poorly than is widely recognized; some (Scandinavian) do much better than others. Again, it s not just economics, its policies and politics that seem to matter most Surprising comparison: US among least mobile No single number that can summarize mobility matrix Conventional measure: Correlation between income/education of child and that of parent Inequality of outcomes and inequality of opportunity are closely linked

17 Prospect of decreasing equality of opportunity Because inequality of outcomes and inequality of opportunity are closely linked Increases in inequality of outcomes today suggests that in the future there will be decreases in equality of opportunity Increasing importance of inequality of (inherited) wealth suggests that we are creating a new plutocracy

18 Contribution of Piketty s recent book Confirms patterns of increasing inequality in incomes focusing on the top Argues that period after WWII was an historical anomaly Refuting Kuznets curve hope that with development inequality would be reduced Suggests that there will be increasing inequality of wealth (and income) unless there are policy changes Success of book in US highlights growing concern about inequality

19 II. Causes of inequality Each aspect of inequality has its cause Causes are interrelated hard to parse Social, economic, political

20 1. All the laws and regulations help shape the degree of inequality Markets don t exist in a vacuum Decisions about enforcing anti-trust laws can affect monopoly rents Decisions about enforcing predatory lending laws can affect well-being of those at the bottom Bankruptcy laws Derivatives given priority in bankruptcy US introduced partial indentured servitude in 2005 bankruptcy law Students could not discharge debt

21 Corporate Governance Firms have used their managerial discretion to seize a larger fraction of corporate rents Sometimes in the name of incentive pay But incentives have actually been perverse

22 2. Macroeconomic and especially monetary policy Focusing on inflation rather than employment Response to crisis illustrates potential distributional effects Lowering interest rates hurt retirees Focus was on restoring stock market values, increasing consumption of the rich Low cost of capital encourages innovation that is capital using and labor saving Unintended (?) consequence of Fed policy Creating a jobless recovery Increasing inequality Indirect help for housing market (through banks) rather than direct assistance Increasing concentration in sector meant that benefits of lower interest rates were not fully passed on Little attention to SME lending, local and regional banks Echoing biases in IMF/US Treasury policies in earlier crises

23 3. Underlying economic forces Increasing disparity in endowments Wealth inequality Inequality in human capital In US related to increasing economic segregation, decreasing access to higher education Momentum for increasing wealth inequality High savings of wealthy, high after tax returns Especially given opportunities for tax avoidance Especially given preferential treatment Increases in assortive mating Complementarity between wealth and returns to wealth

24 Some dampening effects but these may be getting weaker Division of wealth among heirs Primogeniture designed to prevent Smaller families Regression towards mean Rags to riches and back again in three generations In general, there exists equilibrium wealth distribution What we are observing today is a movement towards a more unequal equilibrium wealth distribution

25 Other market forces contributing to Increasing inequality of income Changes in market prices of endowments Skilled-biased technical change Not consistent with timing of increase in wage inequality Not consistent with growth in inequality in recent years Globalization Decreasing share of labor With capital more unequally distributed than labor Result of increasing K/L and elasticity of substitution greater than one (?) Or increasing appropriation of income by rent seeking

26 But even market forces are affected by policy Incentives for different kinds of innovation Rules of the game Tax policies New proposed trade agreements may make things worse Scope for rent seeking

27 Rent seeking vs. Marginal Productivity Theory Latter suggests that those at the top contribute more have made the size of the economic pie bigger Former says that those at the top have excelled in their ability to get a larger share of the pie Markedly different implications for acceptability of inequalities Markedly different views of consequences of tax policy

28 Many forms of rent seeking Getting public resources at low prices Natural resources Privatizations spectrum Selling to government at high prices Military contracts Drugs Corporate welfare Hidden (and not so hidden) tax provisions Open subsidies

29 Marginal productivity theory suggests inequality just rewards for wealth creation No one is self-made Disagreements about relative role of luck, contributions of others Widespread market failures Whenever there is market failure, private rewards and social returns differ Agency issues (corporate governance) Externalities (imposing costs on others) Monopolies (major source of inequality)

30 Rent seeking more plausible explanation Obvious importance in many developing countries that are characterized by rent seeking But also true in advanced industrial countries Example: large bonuses, incomes of corporate executives Bearing little relationship to private contributions, even less to social contribution Evidenced in Great Recession Exploiting deficiencies in corporate governance

31 Large numbers of those at the top have fortunes that are associated with rent seeking If those at the top made the economic pie bigger, would expect that as their incomes increased, others would also there would be trickle-down economics Evidence is to the contrary Experiment: Increase tax rates at the top If inequality is largely associated with rent seeking, would not expect to see much effect on growth confirmed by data

32 Multiple social forces shaping inequality Weaker unions Related to politics, globalization, changing structure of production Changing social mores Willingness of top management to take larger fraction of corporate rents Markedly different at other times and in other countries Legal framework provides them scope

33 Multiple social forces shaping inequality Social conventions and customs Changes in marriage and family structure Discrimination Particularly adverse effects on the bottom Clear evidence in labor market Clear evidence in housing and mortgage markets Becker suggested that in competitive market couldn t persist Game theoretic models show that it can persist Evidence is that it does persist Statistical discrimination But with imperfect information, existence of statistical discrimination can lead to differential outcomes even when ex ante groups are identical

34 Multiple social forces shaping inequality Controversy over relative role of economic and social forces Timing of increase in inequality more consistent with social explanations Evidence in 1990 s suggested that trade is relatively unimportant More recent evidence suggests trade more important

35 III. Adverse consequences of inequality Undermines our democracy Divides our society Weakens our economy The effects are intertwined: societies in which many individuals believe that there are fundamental inequities that the system is not fair don t function well. Individuals and the economies suffer. One of reasons that health outcomes in the US may be so poor, even for those who can afford access to health care, has to do with inequality Inequality in health undermines economic performance

36 Adverse economic consequences of inequality We pay a high price for this inequality Could have more growth, more stability, and more equality This is a fundamental change in perspective: There need not be a trade-off This is in addition to the moral case for a more equal and fairer society

37 Adverse economic consequences of inequality Lack of opportunity means that we are not fully using human resources children of poor are not living up to their potential Rent seeking means that resources are diverted from wealth creation to rent seeking Political economy: more divided society has difficulty getting political consensus behind important public investments And top may use political influence to achieve legal frameworks which increase inequality and instability

38 Vicious circle More economic inequality leads to more political inequality More political inequality leads to rules of the game that amplify economic inequality and political inequality

39 Inequality and instability Inequality is associated with instability Instability has a direct cost, if individuals are risk-averse Instability also adversely affects growth Instability also contributes to inequality Vicious circle

40 Inequality and instability Empirical finding in IMF studies Consistent with recent downturn, Great Depression Not inevitable May be consequence of some forms of inequality more than others

41 Simple model Increased inequality lowers aggregate demand, in absence of countervailing government action Differences in MPC between the top and bottom If government responds by using monetary policy to stimulate the economy, in the presence of inadequate regulation, risks creating bubble The breaking of bubble leads to marked downturn Unlike standard DSGE models, bubble is endogenous There are alternative ways by which government could have responded (increased public investment), but in presence of high levels of political inequality, these are unlikely to be chosen

42 Poverty traps Low income people live in locations where: Their children do not get access to education Inequalities start pre-school, importance of pre-school education They have less access to jobs Especially important in absence of good public transportation They are exposed to more environmental hazards They even have less access to nutritional food Poverty limits ability to think long-term focus is on getting by In developing countries, nutritional poverty trap low income leads to poor nutrition

43 IV. Policy implications Every aspect of policy/legal/institutional framework has effects on inequality Bankruptcy law, competition law, corporate governance, financial sector regulation One can design policy/legal/institutional frameworks in ways which promote growth and equality (both of outcomes and of opportunities) One must remember: Growth doesn t necessarily benefit all. Trickle-down economics doesn t work. Taking account of inequality, broader measures of well-being give very different views of performance Main message of International Commission on the Measurement of Economic Performance and Social Progress

44 Multiple roles for government In changing distribution of income before taxes/transfers Innovations and investment that save the environment, rather than save labor Education Bankruptcy laws Laws affecting the scope for rent seeking In changing distribution of income after taxes/transfer Earlier discussion emphasized the interaction between the two Current tax system favorable treatment of capital gains (speculation)-- both distorts economy and increases inequality

45 Multiple roles for government US has high level of market inequality But highest level of inequality after taxes and transfers Role of government in redistribution diminishing Less progressive income taxes Special treatment of capital gains, dividends Weakened system of social protection

46 There needs to be a Comprehensive Agenda to fight inequality No magic bullets: problems have been long festering; won t be dealt with quickly Enhancing equality of opportunity Education Financial inclusion Inheritance taxes Promoting Full Employment End to austerity End to inflation targeting Discouraging rent seeking Making markets work like markets are supposed to work Industrial policies, including redirecting innovation

47 The problem is in the politics That s why the political agenda is so important We know what economic reforms that would promote growth and equality The question is how can we change the politics? Rules of game affect politics just as they affect economics Gerrymandering Campaign contributions (Citizens United) Compulsory voting Ease of registration, voting

48 In Europe The design of the euro-system makes redistribution more difficult race to the bottom More of the responsibility for creating a more equal society must lie at the European level

49 The Big Question Economies/societies can get trapped in a high inequality equilibrium But some economies/societies are seeming to escape this trap Will the US, UK, and other advanced countries be able to reverse direction

Testimony to the United States Senate Budget Committee Hearing on Opportunity, Mobility, and Inequality in Today's Economy April 1, 2014

Testimony to the United States Senate Budget Committee Hearing on Opportunity, Mobility, and Inequality in Today's Economy April 1, 2014 Testimony to the United States Senate Budget Committee Hearing on Opportunity, Mobility, and Inequality in Today's Economy April 1, 2014 Joseph E. Stiglitz University Professor Columbia University The

More information

Rewriting the Rules of the Market Economy to Achieve Shared Prosperity. Joseph E. Stiglitz New York June 2016

Rewriting the Rules of the Market Economy to Achieve Shared Prosperity. Joseph E. Stiglitz New York June 2016 Rewriting the Rules of the Market Economy to Achieve Shared Prosperity Joseph E. Stiglitz New York June 2016 Enormous growth in inequality Especially in US, and countries that have followed US model Multiple

More information

Inequality and Growth in the Knowledge Society. Joseph E. Stiglitz Siena May 4, 2017

Inequality and Growth in the Knowledge Society. Joseph E. Stiglitz Siena May 4, 2017 Inequality and Growth in the Knowledge Society Joseph E. Stiglitz Siena May 4, 2017 There has been growing inequality within most countries of the world Is this growth a result of forces of nature the

More information

Distribution of income and wealth among individuals: theoretical perspectives. Joseph E. Stiglitz Bangalore Advanced Graduate Workshop July 2016

Distribution of income and wealth among individuals: theoretical perspectives. Joseph E. Stiglitz Bangalore Advanced Graduate Workshop July 2016 Distribution of income and wealth among individuals: theoretical perspectives Joseph E. Stiglitz Bangalore Advanced Graduate Workshop July 2016 Outline Description of growth of inequality Brief description

More information

The State, the Market, And Development. Joseph E. Stiglitz World Institute for Development Economics Research September 2015

The State, the Market, And Development. Joseph E. Stiglitz World Institute for Development Economics Research September 2015 The State, the Market, And Development Joseph E. Stiglitz World Institute for Development Economics Research September 2015 Rethinking the role of the state Influenced by major successes and failures of

More information

There is a seemingly widespread view that inequality should not be a concern

There is a seemingly widespread view that inequality should not be a concern Chapter 11 Economic Growth and Poverty Reduction: Do Poor Countries Need to Worry about Inequality? Martin Ravallion There is a seemingly widespread view that inequality should not be a concern in countries

More information

Income Inequality and Social, Economic, and Political Instability. Joseph Stiglitz Dubai: World Government Summit February 13, 2017

Income Inequality and Social, Economic, and Political Instability. Joseph Stiglitz Dubai: World Government Summit February 13, 2017 Income Inequality and Social, Economic, and Political Instability Joseph Stiglitz Dubai: World Government Summit February 13, 2017 Growing inequality In most countries around the world Even though convergence

More information

Uncertainties in Economics and Politics: What matters? And how will the real estate sector be impacted? Joseph E. Stiglitz Munich October 6, 2017

Uncertainties in Economics and Politics: What matters? And how will the real estate sector be impacted? Joseph E. Stiglitz Munich October 6, 2017 Uncertainties in Economics and Politics: What matters? And how will the real estate sector be impacted? Joseph E. Stiglitz Munich October 6, 2017 Unprecedented uncertainties Geo-political Rules based global

More information

Challenges and Opportunities for Colombia s Social Justice and Economy. Joseph E. Stiglitz Bogota February 16, 2017

Challenges and Opportunities for Colombia s Social Justice and Economy. Joseph E. Stiglitz Bogota February 16, 2017 Challenges and Opportunities for Colombia s Social Justice and Economy Joseph E. Stiglitz Bogota February 16, 2017 Multiple Challenges facing Colombia today Managing its economy through the weak phase

More information

19 ECONOMIC INEQUALITY. Chapt er. Key Concepts. Economic Inequality in the United States

19 ECONOMIC INEQUALITY. Chapt er. Key Concepts. Economic Inequality in the United States Chapt er 19 ECONOMIC INEQUALITY Key Concepts Economic Inequality in the United States Money income equals market income plus cash payments to households by the government. Market income equals wages, interest,

More information

Professor Christina Romer. LECTURE 14 RISING INEQUALITY March 6, 2018

Professor Christina Romer. LECTURE 14 RISING INEQUALITY March 6, 2018 Economics 2 Spring 2018 Professor Christina Romer Professor David Romer LECTURE 14 RISING INEQUALITY March 6, 2018 I. OVERVIEW OF RISING INEQUALITY A. Types of income and rising income inequality B. Reasons

More information

THE DYNAMICS OF SOCIAL INEQUALITIES IN THE PRESENT WORLD

THE DYNAMICS OF SOCIAL INEQUALITIES IN THE PRESENT WORLD THE DYNAMICS OF SOCIAL INEQUALITIES IN THE PRESENT WORLD Roosevelt Institute Working Paper Joseph E. Stiglitz 1 University Professor, Columbia University, Chief Economist at the Roosevelt Institute June

More information

Edexcel (A) Economics A-level

Edexcel (A) Economics A-level Edexcel (A) Economics A-level Theme 4: A Global Perspective 4.2 Poverty and Inequality 4.2.2 Inequality Notes Distinction between wealth and income inequality Wealth is defined as a stock of assets, such

More information

Professor Christina Romer. LECTURE 12 RISING INEQUALITY March 5, 2019

Professor Christina Romer. LECTURE 12 RISING INEQUALITY March 5, 2019 Economics 2 Spring 2019 Professor Christina Romer Professor David Romer LECTURE 12 RISING INEQUALITY March 5, 2019 I. OVERVIEW OF RISING INEQUALITY A. Types of income and rising income inequality B. Reasons

More information

AQA Economics A-level

AQA Economics A-level AQA Economics A-level Microeconomics Topic 7: Distribution of Income and Wealth, Poverty and Inequality 7.1 The distribution of income and wealth Notes Distinction between wealth and income inequality

More information

CH 19. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question.

CH 19. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question. Class: Date: CH 19 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. In the United States, the poorest 20 percent of the household receive approximately

More information

Introduction *1. Joseph E. Stiglitz1 University Professor Columbia University

Introduction *1. Joseph E. Stiglitz1 University Professor Columbia University Introduction *1 Joseph E. Stiglitz1 University Professor Columbia University In discussions of inclusive, sustainable development, we hear a lot about stability and growth. These are certainly important,

More information

Professor Christina Romer. LECTURE 13 LABOR AND WAGES March 1, 2018

Professor Christina Romer. LECTURE 13 LABOR AND WAGES March 1, 2018 Economics 2 Spring 2018 Professor Christina Romer Professor David Romer LECTURE 13 LABOR AND WAGES March 1, 2018 I. OVERVIEW A. Another firm decision: How to produce the desired quantity B. The market

More information

Professor Christina Romer. LECTURE 13 LABOR AND WAGES March 2, 2017

Professor Christina Romer. LECTURE 13 LABOR AND WAGES March 2, 2017 Economics 2 Spring 2017 Professor Christina Romer Professor David Romer LECTURE 13 LABOR AND WAGES March 2, 2017 I. OVERVIEW A. Another firm decision: How to produce the desired quantity B. The market

More information

Economic Disparity. Mea, Moo, Teale

Economic Disparity. Mea, Moo, Teale Economic Disparity Mea, Moo, Teale What are the causes? Impact of Colonialism Population Growth Foreign Debt War Leadership Issues Trade Inequalities Wages and salaries Labour market Taxes Education Globalization

More information

The Overselling of Globalization: Truth and Consequences. Joseph Stiglitz Volcker Award Lecture Washington, D.C. March 6, 2017

The Overselling of Globalization: Truth and Consequences. Joseph Stiglitz Volcker Award Lecture Washington, D.C. March 6, 2017 The Overselling of Globalization: Truth and Consequences Joseph Stiglitz Volcker Award Lecture Washington, D.C. March 6, 2017 Key epistemological and moral question How do we know what we know? With what

More information

Notes on exam in International Economics, 16 January, Answer the following five questions in a short and concise fashion: (5 points each)

Notes on exam in International Economics, 16 January, Answer the following five questions in a short and concise fashion: (5 points each) Question 1. (25 points) Notes on exam in International Economics, 16 January, 2009 Answer the following five questions in a short and concise fashion: (5 points each) a) What are the main differences between

More information

Thomas Piketty Capital in the 21st Century

Thomas Piketty Capital in the 21st Century Thomas Piketty Capital in the 21st Century Excerpts: Introduction p.20-27! The Major Results of This Study What are the major conclusions to which these novel historical sources have led me? The first

More information

Inequality Is Not Inevitable

Inequality Is Not Inevitable The Great Divide Inequality Is Not Inevitable By JOSEPH E. STIGLITZ June 27, 2014 6:16 pm The Great Divide is a series about inequality. AN insidious trend has developed over this past third of a century.

More information

Market failures. If markets "work perfectly well", governments should just play their minimal role, which is to:

Market failures. If markets work perfectly well, governments should just play their minimal role, which is to: Market failures If markets "work perfectly well", governments should just play their minimal role, which is to: (a) protect property rights, and (b) enforce contracts. But usually markets fail. This happens

More information

Chapter 10. Resource Markets and the Distribution of Income. Copyright 2011 Pearson Addison-Wesley. All rights reserved.

Chapter 10. Resource Markets and the Distribution of Income. Copyright 2011 Pearson Addison-Wesley. All rights reserved. Chapter 10 Resource Markets and the Distribution of Income Resource markets differ from markets for consumer goods in several key ways First, the demand for resources comes from firms producing goods and

More information

Professor Christina Romer. LECTURE 11 LABOR AND WAGES February 28, 2019

Professor Christina Romer. LECTURE 11 LABOR AND WAGES February 28, 2019 Economics 2 Spring 2019 Professor Christina Romer Professor David Romer LECTURE 11 LABOR AND WAGES February 28, 2019 I. OVERVIEW A. The market for labor B. Why labor market analysis is important II. LABOR

More information

and with support from BRIEFING NOTE 1

and with support from BRIEFING NOTE 1 and with support from BRIEFING NOTE 1 Inequality and growth: the contrasting stories of Brazil and India Concern with inequality used to be confined to the political left, but today it has spread to a

More information

SCHOOLS OF ECONOMICS. Classical, Keynesian, & Monetary

SCHOOLS OF ECONOMICS. Classical, Keynesian, & Monetary SCHOOLS OF ECONOMICS Classical, Keynesian, & Monetary CLASSICAL THEORY Also known as Neo- Classical Supply Side Trickle Down Free Trade FIVE CLASSICAL ECONOMIC BASICS In the long run, competition forces

More information

10/7/2013 SCHOOLS OF ECONOMICS. Classical, Keynesian, & Monetary. as Neo- Classical Supply Side Trickle Down Free Trade CLASSICAL THEORY

10/7/2013 SCHOOLS OF ECONOMICS. Classical, Keynesian, & Monetary. as Neo- Classical Supply Side Trickle Down Free Trade CLASSICAL THEORY SCHOOLS OF ECONOMICS Classical, Keynesian, & Monetary CLASSICAL THEORY Also known as Neo- Classical Supply Side Trickle Down Free Trade 1 FIVE CLASSICAL ECONOMIC BASICS In the long run, competition forces

More information

INEQUALITY AND POVERTY

INEQUALITY AND POVERTY INEQUALITY AND POVERTY DRAKE HIGH SCHOOL MAY 8, 2017 OUTLINE Income inequality Define it Measure it How does it happen? Why it matters What to do about it Poverty Define it Measure it How does it happen?

More information

World changes in inequality:

World changes in inequality: World changes in inequality: facts, causes, policies François Bourguignon Paris School of Economics BIS, Luzern, June 2016 1 The rising importance of inequality in the public debate Due to fast increase

More information

LECTURE 23: A SUMMARY OF CAPITAL IN THE 21 ST CENTURY

LECTURE 23: A SUMMARY OF CAPITAL IN THE 21 ST CENTURY LECTURE 23: A SUMMARY OF CAPITAL IN THE 21 ST CENTURY Dr. Aidan Regan Email: aidan.regan@ucd.ie Website: www.aidanregan.com Teaching blog: www.capitalistdemocracy.wordpress.com Twitter: @aidan_regan #CapitalUCD

More information

Why Does Inequality Matter? T. M. Scanlon. Chapter 8: Unequal Outcomes. It is well known that there has been an enormous increase in inequality in the

Why Does Inequality Matter? T. M. Scanlon. Chapter 8: Unequal Outcomes. It is well known that there has been an enormous increase in inequality in the Why Does Inequality Matter? T. M. Scanlon Chapter 8: Unequal Outcomes It is well known that there has been an enormous increase in inequality in the United States and other developed economies in recent

More information

New Ideas About Income Inequality in A Digitalizing World

New Ideas About Income Inequality in A Digitalizing World October 3, 2018 New Ideas About Income Inequality in A Digitalizing World At a recent INSEAD alumni event in Zurich, Mark Stabile, INSEAD Professor of Economics, spoke about the topic of income inequality,

More information

Towards Sustainable Economy and Society Under Current Globalization Trends and Within Planetary Boundaries: A Tribute to Hirofumi Uzawa

Towards Sustainable Economy and Society Under Current Globalization Trends and Within Planetary Boundaries: A Tribute to Hirofumi Uzawa Towards Sustainable Economy and Society Under Current Globalization Trends and Within Planetary Boundaries: A Tribute to Hirofumi Uzawa Joseph E. Stiglitz Tokyo March 2016 Harsh reality: We are living

More information

Reducing income inequality by economics growth in Georgia

Reducing income inequality by economics growth in Georgia Reducing income inequality by economics growth in Georgia Batumi Shota Rustaveli State University Faculty of Economics and Business PhD student in Economics Nino Kontselidze Abstract Nowadays Georgia has

More information

Oxfam Education

Oxfam Education Background notes on inequality for teachers Oxfam Education What do we mean by inequality? In this resource inequality refers to wide differences in a population in terms of their wealth, their income

More information

Economics Honors Exam 2009 Solutions: Macroeconomics, Questions 6-7

Economics Honors Exam 2009 Solutions: Macroeconomics, Questions 6-7 Economics Honors Exam 2009 Solutions: Macroeconomics, Questions 6-7 Question 6 (Macroeconomics, 30 points). Please answer each question below. You will be graded on the quality of your explanation. a.

More information

Professor Christina Romer. LECTURE 11 LABOR AND WAGES February 28, 2019

Professor Christina Romer. LECTURE 11 LABOR AND WAGES February 28, 2019 Economics 2 Spring 2019 Professor Christina Romer Professor David Romer LECTURE 11 LABOR AND WAGES February 28, 2019 I. OVERVIEW A. The market for labor B. Why labor market analysis is important II. LABOR

More information

Inclusive growth and development founded on decent work for all

Inclusive growth and development founded on decent work for all Inclusive growth and development founded on decent work for all Statement by Mr Guy Ryder, Director-General International Labour Organization International Monetary and Financial Committee Washington D.C.,

More information

Assignment to make up for missed class on August 29, 2011 due to Irene

Assignment to make up for missed class on August 29, 2011 due to Irene SS141-3SA Macroeconomics Assignment to make up for missed class on August 29, 2011 due to Irene Read pages 442-445 (copies attached) of Mankiw's "The Political Philosophy of Redistributing Income". Which

More information

Income and wealth inequalities

Income and wealth inequalities Understanding the World Economy Master in Economics and Business Income and wealth inequalities Lecture 4 Nicolas Coeurdacier nicolas.coeurdacier@sciencespo.fr People care about inequalities--- the Ultimatum

More information

Is the recession over in New York?

Is the recession over in New York? By James A. Parrott May 10, 2010 Job numbers are up, unemployment is down. Consumer confidence is up. Gross domestic product has increased for three quarters. It sounds like the is behind us and we re

More information

THE ECONOMICS OF SUBSIDIES. J. Atsu Amegashie University of Guelph Guelph, Canada. website:

THE ECONOMICS OF SUBSIDIES. J. Atsu Amegashie University of Guelph Guelph, Canada. website: THE ECONOMICS OF SUBSIDIES J. Atsu Amegashie University of Guelph Guelph, Canada website: http://www.uoguelph.ca/~jamegash/research.htm August 10, 2005 The removal of subsidies on agriculture, health,

More information

Income Inequality in the United States Through the Lens of Other Advanced Economies

Income Inequality in the United States Through the Lens of Other Advanced Economies Mia DeSanzo Wealth & Power Major Writing Assignment 3/3/16 Income Inequality in the United States Through the Lens of Other Advanced Economies Income inequality in the United States has become a political

More information

Poverty & Inequality

Poverty & Inequality Sociology 125 Lecture 12/13 Poverty & Inequality October 18 & 23, 2006 Film #2: Bread & Roses 7:00 p.m. Tuesday and Wednesday, October 17 & 18 125 Ag Hall 1450 Linden Drive U.S. Household Income Distribution

More information

Making Trade Globalization Inclusive. Joseph E. Stiglitz ASSA Meetings Philadelphia January 2018

Making Trade Globalization Inclusive. Joseph E. Stiglitz ASSA Meetings Philadelphia January 2018 Making Trade Globalization Inclusive Joseph E. Stiglitz ASSA Meetings Philadelphia January 2018 Should have expected that trade globalization would have hurt unskilled workers in US and other advanced

More information

Earnings Inequality: Stylized Facts, Underlying Causes, and Policy

Earnings Inequality: Stylized Facts, Underlying Causes, and Policy Earnings Inequality: Stylized Facts, Underlying Causes, and Policy Barry Hirsch W.J. Usery Chair of the American Workplace Department of Economics Andrew Young School of Policy Sciences Georgia State University

More information

issues involves government policies that contain a balance of the left and right approaches.

issues involves government policies that contain a balance of the left and right approaches. 16W The Politics of Economics LEARNING OBJECTIVES After studying this chapter, you should be able to 1. Summarize the major economic goals of right-wingers, and explain how they believe these can best

More information

Copyrighted Material

Copyrighted Material Since the 1980s, the expression (SA) has been used to denote programs of policy reforms in developing countries undertaken with financial support from the World Bank. Structural adjustment programs (SAPs)

More information

The Rule of Law, Economic Efficiency, and Social Justice: A Primer for the President. Joseph E. Stiglitz Cornell Club April 12, 2018

The Rule of Law, Economic Efficiency, and Social Justice: A Primer for the President. Joseph E. Stiglitz Cornell Club April 12, 2018 The Rule of Law, Economic Efficiency, and Social Justice: A Primer for the President Joseph E. Stiglitz Cornell Club April 12, 2018 The critical role of the Enlightenment Development of science Development

More information

Inequality and the Global Middle Class

Inequality and the Global Middle Class ANALYZING GLOBAL TRENDS for Business and Society Week 3 Inequality and the Global Middle Class Mauro F. Guillén Mini-Lecture 3.1 This week we will analyze recent trends in: Global inequality and poverty.

More information

Recession in Japan Part I

Recession in Japan Part I Recession in Japan Part I Deep-rooted problems by Shima M. Yuko April, 2005 Although economic downturns are universal phenomena in recent years, Japan has been suffering from a severe economic recession

More information

Earnings Inequality: Stylized Facts, Underlying Causes, and Policy

Earnings Inequality: Stylized Facts, Underlying Causes, and Policy Earnings Inequality: Stylized Facts, Underlying Causes, and Policy Barry Hirsch Department of Economics Andrew Young School of Policy Sciences Georgia State University Prepared for Atlanta Economics Club

More information

Macroeconomics and Gender Inequality Yana van der Meulen Rodgers Rutgers University

Macroeconomics and Gender Inequality Yana van der Meulen Rodgers Rutgers University Macroeconomics and Gender Inequality Yana van der Meulen Rodgers Rutgers University International Association for Feminist Economics Pre-Conference July 15, 2015 Organization of Presentation Introductory

More information

Maurizio Franzini and Mario Planta

Maurizio Franzini and Mario Planta Maurizio Franzini and Mario Planta 2 premises: 1. Inequality is a burning issue for economic, ethical and political reasons (Sen, Stiglitz, Piketty, Milanovic) 2. Inequality is today a more complex phenomenon

More information

Explanations of Slow Growth in Productivity and Real Wages

Explanations of Slow Growth in Productivity and Real Wages Explanations of Slow Growth in Productivity and Real Wages America s Greatest Economic Problem? Introduction Slow growth in real wages is closely related to slow growth in productivity. Only by raising

More information

Expert group meeting. New research on inequality and its impacts World Social Situation 2019

Expert group meeting. New research on inequality and its impacts World Social Situation 2019 Expert group meeting New research on inequality and its impacts World Social Situation 2019 New York, 12-13 September 2018 Introduction In 2017, the General Assembly encouraged the Secretary-General to

More information

Chapter 4 Specific Factors and Income Distribution

Chapter 4 Specific Factors and Income Distribution Chapter 4 Specific Factors and Income Distribution Chapter Organization Introduction The Specific Factors Model International Trade in the Specific Factors Model Income Distribution and the Gains from

More information

A Barometer of the Economic Recovery in Our State

A Barometer of the Economic Recovery in Our State THE WELL-BEING OF NORTH CAROLINA S WORKERS IN 2012: A Barometer of the Economic Recovery in Our State By ALEXANDRA FORTER SIROTA Director, BUDGET & TAX CENTER. a project of the NORTH CAROLINA JUSTICE CENTER

More information

Ghana Lower-middle income Sub-Saharan Africa (developing only) Source: World Development Indicators (WDI) database.

Ghana Lower-middle income Sub-Saharan Africa (developing only) Source: World Development Indicators (WDI) database. Knowledge for Development Ghana in Brief October 215 Poverty and Equity Global Practice Overview Poverty Reduction in Ghana Progress and Challenges A tale of success Ghana has posted a strong growth performance

More information

Part 1: Focus on Income. Inequality. EMBARGOED until 5/28/14. indicator definitions and Rankings

Part 1: Focus on Income. Inequality. EMBARGOED until 5/28/14. indicator definitions and Rankings Part 1: Focus on Income indicator definitions and Rankings Inequality STATE OF NEW YORK CITY S HOUSING & NEIGHBORHOODS IN 2013 7 Focus on Income Inequality New York City has seen rising levels of income

More information

Inequality in the United States Jon D. Haveman, Ph.D.

Inequality in the United States Jon D. Haveman, Ph.D. Inequality in the United States Jon D. Haveman, Ph.D. ExtraFood October 10, 2018 1 National Economic Education Delegation Vision - One day, the public discussion of policy issues will be grounded in an

More information

International Trade Theory College of International Studies University of Tsukuba Hisahiro Naito

International Trade Theory College of International Studies University of Tsukuba Hisahiro Naito International Trade Theory College of International Studies University of Tsukuba Hisahiro Naito The specific factors model allows trade to affect income distribution as in H-O model. Assumptions of the

More information

CAN FAIR VOTING SYSTEMS REALLY MAKE A DIFFERENCE?

CAN FAIR VOTING SYSTEMS REALLY MAKE A DIFFERENCE? CAN FAIR VOTING SYSTEMS REALLY MAKE A DIFFERENCE? Facts and figures from Arend Lijphart s landmark study: Patterns of Democracy: Government Forms and Performance in Thirty-Six Countries Prepared by: Fair

More information

Inequality and economic growth

Inequality and economic growth Introduction One of us is a theorist, and one of us is an historian, but both of us are economists interested in modern debates about technical change, convergence, globalization, and inequality. The central

More information

Liberty, Equality, Prosperity

Liberty, Equality, Prosperity Liberty, Equality, Prosperity November 2015 www.antonydavies.org www.antonydavies.org 1 Economic Freedom Less More Economic decisions made collectively. Economic decisions made individually. Controlled

More information

CHAPTER 2 LITERATURE REVIEWS

CHAPTER 2 LITERATURE REVIEWS CHAPTER 2 LITERATURE REVIEWS The relationship between efficiency and income equality is an old topic, but Lewis (1954) and Kuznets (1955) was the earlier literature that systemically discussed income inequality

More information

Documentation and methodology...1

Documentation and methodology...1 Table of contents Documentation and methodology...1 Chapter 1 Overview: Policy-driven inequality blocks living-standards growth for low- and middle-income Americans...5 America s vast middle class has

More information

Remarks on the Political Economy of Inequality

Remarks on the Political Economy of Inequality Remarks on the Political Economy of Inequality Bank of England Tim Besley LSE December 19th 2014 TB (LSE) Political Economy of Inequality December 19th 2014 1 / 35 Background Research in political economy

More information

Statement by Juan Pablo Bohoslavsky

Statement by Juan Pablo Bohoslavsky Statement by Juan Pablo Bohoslavsky UN Independent Expert on the effects of foreign debt and other related financial obligations of States on the full enjoyment of all human rights, particularly economic,

More information

Economics Of Migration

Economics Of Migration Department of Economics and Centre for Macroeconomics public lecture Economics Of Migration Professor Alan Manning Professor of Economics and Director of the Centre for Economic Performance s research

More information

A 13-PART COURSE IN POPULAR ECONOMICS SAMPLE COURSE OUTLINE

A 13-PART COURSE IN POPULAR ECONOMICS SAMPLE COURSE OUTLINE A 13-PART COURSE IN POPULAR ECONOMICS SAMPLE COURSE OUTLINE By Jim Stanford Canadian Centre for Policy Alternatives, 2008 Non-commercial use and reproduction, with appropriate citation, is authorized.

More information

Thoughts on Globalization, 1/15/02 Pete Bohmer

Thoughts on Globalization, 1/15/02 Pete Bohmer Thoughts on Globalization, 1/15/02 Pete Bohmer I. Class this week, Wednesday optional to come in, Dan and I will be here at 10:00, turn in paper by 1:00 Friday-not enough time for both movies; Global Assembly

More information

IPR 40 th Anniversary Distinguished Public Policy Lecture. Rebecca Blank. "Why Does Inequality Matter and What Should We Do About It?

IPR 40 th Anniversary Distinguished Public Policy Lecture. Rebecca Blank. Why Does Inequality Matter and What Should We Do About It? IPR 40 th Anniversary Distinguished Public Policy Lecture Rebecca Blank "Why Does Inequality Matter and What Should We Do About It?" Robert S. Kerr Senior Fellow, Brookings Institution. Former Dean of

More information

65. Broad access to productive jobs is essential for achieving the objective of inclusive PROMOTING EMPLOYMENT AND MANAGING MIGRATION

65. Broad access to productive jobs is essential for achieving the objective of inclusive PROMOTING EMPLOYMENT AND MANAGING MIGRATION 5. PROMOTING EMPLOYMENT AND MANAGING MIGRATION 65. Broad access to productive jobs is essential for achieving the objective of inclusive growth and help Turkey converge faster to average EU and OECD income

More information

UNION COLLEGE DEPARTMENT OF ECONOMICS, FALL 2004 ECO 146 SEMINAR IN GLOBAL ECONOMIC ISSUES GLOBALIZATION AND LABOR MARKETS

UNION COLLEGE DEPARTMENT OF ECONOMICS, FALL 2004 ECO 146 SEMINAR IN GLOBAL ECONOMIC ISSUES GLOBALIZATION AND LABOR MARKETS UNION COLLEGE DEPARTMENT OF ECONOMICS, FALL 2004 ECO 146 SEMINAR IN GLOBAL ECONOMIC ISSUES GLOBALIZATION AND LABOR MARKETS The Issues wage inequality between skilled and unskilled labor the effects of

More information

Mexico: How to Tap Progress. Remarks by. Manuel Sánchez. Member of the Governing Board of the Bank of Mexico. at the. Federal Reserve Bank of Dallas

Mexico: How to Tap Progress. Remarks by. Manuel Sánchez. Member of the Governing Board of the Bank of Mexico. at the. Federal Reserve Bank of Dallas Mexico: How to Tap Progress Remarks by Manuel Sánchez Member of the Governing Board of the Bank of Mexico at the Federal Reserve Bank of Dallas Houston, TX November 1, 2012 I feel privileged to be with

More information

Capital in the 21 st century A Middle East Perspective. Thomas Piketty Paris School of Economics Cairo, June

Capital in the 21 st century A Middle East Perspective. Thomas Piketty Paris School of Economics Cairo, June Capital in the 21 st century A Middle East Perspective Thomas Piketty Paris School of Economics Cairo, June 2 2016 This presentation is partly based upon my book Capital in the 21 st century (HUP, 2014)

More information

GLOBALIZATION AND DEVELOPMENT

GLOBALIZATION AND DEVELOPMENT GLOBALIZATION AND DEVELOPMENT JOSEPH E. STIGLITZ TOKYO JULY 2007 The Successes of Globalization China and India, with 2.4 billion people, growing at historically unprecedented rates Continuing the successes

More information

$15. Bigger paychecks, more good jobs, & thriving communities. Why raising the minimum wage is good for everyone in North Carolina.

$15. Bigger paychecks, more good jobs, & thriving communities. Why raising the minimum wage is good for everyone in North Carolina. Bigger paychecks, more good jobs, & thriving communities March 2019 Why raising the minimum wage is good for everyone in North Carolina By ALLAN FREYER, DIRECTOR A FOUR-PART SERIES FROM $15 per hour by

More information

HOW ECONOMIES GROW AND DEVELOP Macroeconomics In Context (Goodwin, et al.)

HOW ECONOMIES GROW AND DEVELOP Macroeconomics In Context (Goodwin, et al.) Chapter 17 HOW ECONOMIES GROW AND DEVELOP Macroeconomics In Context (Goodwin, et al.) Chapter Overview This chapter presents material on economic growth, such as the theory behind it, how it is calculated,

More information

Informal Summary Economic and Social Council High-Level Segment

Informal Summary Economic and Social Council High-Level Segment Informal Summary 2011 Economic and Social Council High-Level Segment Special panel discussion on Promoting sustained, inclusive and equitable growth for accelerating poverty eradication and achievement

More information

Downloads from this web forum are for private, non-commercial use only. Consult the copyright and media usage guidelines on

Downloads from this web forum are for private, non-commercial use only. Consult the copyright and media usage guidelines on Econ 3x3 www.econ3x3.org A web forum for accessible policy-relevant research and expert commentaries on unemployment and employment, income distribution and inclusive growth in South Africa Downloads from

More information

Understanding inequality and what to do about it

Understanding inequality and what to do about it and what to do about it Miles Corak University of Ottawa, Ottawa Canada Presentation to the All Party Anti-Poverty Caucus House of Commons, Ottawa, February 12th, 2013 Three issues to talk about,... Three

More information

Poverty and Inequality

Poverty and Inequality Chapter 4 Poverty and Inequality Problems and Policies: Domestic After completing this chapter, you will be able to 1. Measure poverty across countries using different approaches and explain how poverty

More information

Inequality: Empirics, Causes, Consequences, and Implications. Marshall Steinbaum. December 10, Washington Center for Equitable Growth 1/26

Inequality: Empirics, Causes, Consequences, and Implications. Marshall Steinbaum. December 10, Washington Center for Equitable Growth 1/26 1/26 Inequality: Empirics, Causes, Consequences, and Implications Marshall Steinbaum Washington Center for Equitable Growth December 10, 2014 2/26 Empirical Background Inequality in the US has skyrocketed

More information

The Political Challenges of Economic Reforms in Latin America. Overview of the Political Status of Market-Oriented Reform

The Political Challenges of Economic Reforms in Latin America. Overview of the Political Status of Market-Oriented Reform The Political Challenges of Economic Reforms in Latin America Overview of the Political Status of Market-Oriented Reform Political support for market-oriented economic reforms in Latin America has been,

More information

Globalization and Inequality : a brief review of facts and arguments

Globalization and Inequality : a brief review of facts and arguments Globalization and Inequality : a brief review of facts and arguments François Bourguignon Paris School of Economics LIS Lecture, July 2018 1 The globalization/inequality debate and recent political surprises

More information

Benoît Cœuré: Interview with BFM Business TV

Benoît Cœuré: Interview with BFM Business TV Benoît Cœuré: Interview with BFM Business TV Interview with Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, and BFM Business TV, conducted by Mr Stéphane Soumier on 12 March

More information

The ten years since the start of the Great Recession have done little to address

The ten years since the start of the Great Recession have done little to address BUDGET & TAX CENTER December 2017 ENJOY READING THESE REPORTS? Please consider making a donation to support the Budget & tax Center at www.ncjustice.org MEDIA CONTACT: PATRICK McHUGH 919/856-2183 patrick.mchugh@ncjustice.org

More information

Labor Supply at the Extensive and Intensive Margins: The EITC, Welfare and Hours Worked

Labor Supply at the Extensive and Intensive Margins: The EITC, Welfare and Hours Worked Labor Supply at the Extensive and Intensive Margins: The EITC, Welfare and Hours Worked Bruce D. Meyer * Department of Economics and Institute for Policy Research, Northwestern University and NBER January

More information

This Expansion Looks Familiar

This Expansion Looks Familiar 1 of 4 2/14/2007 8:28 AM February 13, 2007 This Expansion Looks Familiar By EDUARDO PORTER and JEREMY W. PETERS It is five years into an economic expansion and most Americans are still waiting for their

More information

GDP - AN INDICATOR OF PROSPERITY OR A MISLEADING ONE? CRIVEANU MARIA MAGDALENA, PHD STUDENT, UNIVERSITATEA DIN CRAIOVA, ROMANIA

GDP - AN INDICATOR OF PROSPERITY OR A MISLEADING ONE? CRIVEANU MARIA MAGDALENA, PHD STUDENT, UNIVERSITATEA DIN CRAIOVA, ROMANIA GDP - AN INDICATOR OF PROSPERITY OR A MISLEADING ONE? CRIVEANU MARIA MAGDALENA, PHD STUDENT, UNIVERSITATEA DIN CRAIOVA, ROMANIA mag_da64 @yahoo.com Abstract The paper presents a comparative analysis of

More information

Latin America was already a region of sharp

Latin America was already a region of sharp The results of in-depth analyses for Argentina, Brazil, and Mexico reveal two main factors that explain this phenomenon: a fall in the premium that favors skilled over unskilled labor, and more progressive

More information

The International Law Annual Senior Lecturer, Kent Law School, Eliot College, University of Kent.

The International Law Annual Senior Lecturer, Kent Law School, Eliot College, University of Kent. MULTILATERAL TRADE IN A TIME OF CRISIS -Dr. Donatella Alessandrini 1 The decline of world trade has attracted a lot of attention in the past three years. After an initial recovery in 2010, due in large

More information

The Future of Inequality

The Future of Inequality The Future of Inequality As almost every economic policymaker is aware, the gap between the wages of educated and lesseducated workers has been growing since the early 1980s and that change has been both

More information

INEQUALITY: POVERTY AND WEALTH CHAPTER 2

INEQUALITY: POVERTY AND WEALTH CHAPTER 2 INEQUALITY: POVERTY AND WEALTH CHAPTER 2 Defining Economic Inequality Social Stratification- rank individuals based on objective criteria, often wealth, power and/or prestige. Human beings have a tendency

More information

The Minimum Wage. Introduction. Impacts on Employment

The Minimum Wage. Introduction. Impacts on Employment The Minimum Wage Copyright 2013 by Tony Lima. Permission is granted to quote entire paragraphs of text without editing. If you wish to edit a paragraph, I must approve your editing before you publish it.

More information