Showing papers in "Handbook of Income Distribution in 2014"
TL;DR: This article reviewed the long run developments in the distribution of personal income and wealth and discussed suggested explanations for the observed patterns, and showed that inequality was historically high almost everywhere at the beginning of the twentieth century.
Abstract: This paper reviews the long run developments in the distribution of personal income and wealth. It also discusses suggested explanations for the observed patterns. We try to answer questions such as: What do we know, and how do we know, about the distribution of income and wealth over time? Are there common trends across countries or over the path of development? How do the facts relate to proposed theories about changes in inequality? We present the main inequality trends, in some cases starting as early as in the late eighteenth century, combining previous research with recent findings in the so-called top income literature and new evidence on wealth concentration. The picture that emerges shows that inequality was historically high almost everywhere at the beginning of the twentieth century. In some countries this situation was preceded by increasing concentration, but in most cases inequality seems to have been relatively constant at a high level in the nineteenth century. Over the twentieth century inequality decreased almost everywhere for the first 80 years, largely due to decreasing wealth concentration and decreasing capital incomes in the top of the distribution. Thereafter trends are more divergent across countries and also different across income and wealth distributions. Econometric evidence over the long run suggests that top shares increase in periods of above average growth while democracy and high marginal tax rates are associated with lower top shares.
236 citations
TL;DR: In this article, the authors discuss the measurement of wage inequality, data sources, and stylized facts of wage dispersion for rich countries, and discuss the problems of matching individuals to their relevant institutional framework.
Abstract: Considering the contribution of the distribution of individual wages and earnings to that of household incomes we find two separate literatures that should be brought together, and bring “new institutions” into play. Growing female employment, rising dual-earnership and part-time employment underline its relevance. We discuss the measurement of wage inequality, data sources, and stylized facts of wage dispersion for rich countries. The literature explaining the dispersion of wage rates and the role of institutions is evaluated, from the early 1980s to the recent literature on job polarization and tasks as well as on the minimum wage. Distinguishing between supply-and-demand approaches and institutional ones, we find supply and demand challenged by the empirical measurement of technological change and a risk of ad hoc additions, without realizing their institutional preconditions. The institutional approach faces an abundance of institutions without a clear conceptual delineation of institutions and their interactions. Empirical cross-country analysis of the correlation between institutional measures and wage inequality incorporates unemployment and working hours dynamics, discussing the problems of matching individuals to their relevant institutional framework. Minimum wage legislation and active labor market policies come out negatively correlated to earnings inequality in US and EU countries.
53 citations
TL;DR: In this paper, an overview of how conventional trade theory has fared in predicting changes in inequality and how it has needed to be extended and expanded when, contrary to some received wisdom, greater global integration is associated with increasing inequality in developed and developing countries.
Abstract: To what extent can increasing inequality be explained by globalization? And if there is a connection, what if anything can and should be done about it? This chapter begins with an overview of how conventional trade theory has fared in predicting changes in inequality and how it has needed to be extended and expanded when, contrary to some received wisdom, greater global integration is associated with increasing inequality in developed and developing countries. From there, the chapter goes well beyond these concerns to take in the effects of crises on inequality, globalization and gender inequality, openness and spatial inequality, and the effect of international migration on inequality. Finally, reviews of the latest developments in the design of national and global policy to address the challenges of globalization and inequality are presented. The literature reviewed is lively and flourishing. Having animated the economic analysis and policy discourse for the past half century, the globalization–inequality nexus seems set to continue in this vein in the coming decades.
34 citations