Growing Income Inequalities in Advanced Countries

Chusseau, Nathalie; Dumont, Michel

doi:10.1057/9781137283306_2

Cited by 9 publications

(6 citation statements)

References 95 publications

(91 reference statements)

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“…Moreover, at the international level, a sort of tax competition has taken place among countries in the past two to three decades to attract more capital, and this has helped shift power relations between labour and capital, advantaging capital, combined with a strong decline in trade union participation and a progressive weakening in labour market institutions. This has led to negative consequences for income distribution and has increased inequality (Borjas and Ramey, 1995; Chusseau and Dumont, 2012; Gordon, 2012). Wage shares declined dramatically in particular during 1980–1990, and stagnated later, with a negative impact on aggregate demand, as argued by some post-Keynesian authors (Lavoie, 2014; Stockhammer, 2015).…”

Section: Inequality and Welfare Models: An Empirical Investigationmentioning

confidence: 99%

Economic growth, welfare models and inequality in the context of globalisation

Tridico

Meloni

2018

Econ. labour relat. rev.

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The recent economic crisis was a test case for many advanced countries to determine the capacity of their socio-economic model to cope with the challenges of globalisation and financial crash. From this perspective, the aim of this article is to explore whether the expansion of the welfare state should be seen as a barrier to economic growth and competitiveness, as ‘neoliberal’ economists often argue, or whether increasing public social provision might contribute to enhancing real income. After a comparative discussion of the evolution of different welfare models in developed countries, we advance our argument that public social spending is not a drain on competitiveness or an obstacle to economic efficiency. On the contrary, we explore the possibility that increasing welfare expenditure can stimulate economic growth along with lowering inequality, while the so-called ‘efficiency thesis’ (according to which globalisation needs to be accompanied by the retrenchment of welfare states in order to promote external competitiveness) produces worse economic performance and higher inequality. As a test of this hypothesis, we analyse empirical data on 34 Organisation for Economic Co-operation and Development countries from 1990 to 2013. We use econometric analysis to indicate that the so-called ‘compensation thesis’ (a process whereby globalisation is regulated through expansion of welfare states) may contribute to real income dynamics, while greater income inequality may inhibit per capita gross domestic product growth. JEL Codes: I380, P510, F600, G010

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Section: Inequality and Welfare Models: An Empirical Investigationmentioning

confidence: 99%

Economic growth, welfare models and inequality in the context of globalisation

Tridico

Meloni

2018

Econ. labour relat. rev.

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“…Of course, there are many papers that also survey trade and wage inequality (e.g. Burtless, ; Richardson, ; Cline, ; Williamson, ; Wolff, ; Feenstra and Hanson, ; Kremer and Maskin, ; Goldberg and Pavcnik, ; Chusseau et al , ; Drews, ; Harrison et al , ; Chusseau and Dumont, ). Our survey paper adds value as follows: First, our paper is not a mere chronological survey but focuses on the anomalies and their resolutions.…”

Section: Increased Trade and Increased Wage Inequalitymentioning

confidence: 99%

A Survey of Trade and Wage Inequality: Anomalies, Resolutions and New Trends

Kurokawa

2012

Journal of Economic Surveys

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This paper surveys recent studies on trade and wage inequality. We first introduce some trade-based explanations for increased wage inequality. There are, however, a number of criticisms of this line of thought based on the 'trade-wage inequality anomaly', the 'price-wage anomaly', and the small volume of trade. Mainly due to these criticisms, trade-based explanations for rising wage inequality have been limited in the economic literature. Rather, the primary explanations for wage inequality have been based on skill-biased technological change. Some trade models, however, have weakened the above criticisms, and more economists now argue that the effect of trade, though relatively small compared to that of technological change, is more significant than generally believed. Finally, we attempt to link new trends in inequality, such as job polarization and within-group inequality, to the trade and wage inequality literature. Increased Trade and Increased Wage InequalityAs Figure 1 shows, the relative wage of high-skilled to low-skilled workers began to increase in US manufacturing industries in the late 1980s, and this phenomenon was also observed in Mexico. 1 As can be seen, these two countries showed surprisingly similar movements in relative wages in the late 1980s and early 1990s. 2 What is the cause of this recent increase in wage inequality in these countries?The data also indicate that, as shown in Figure 2, US-Mexican trade as a percentage of US GDP increased dramatically during the same period. 3 Hence, this increased trade might have contributed to the recent increase in skill premiums in both countries. 4 Past studies, such as Wood (1994), have investigated the possible relationship between trade and wage inequality. It is still a topic of interest and heated debate among economists.However, there are a number of criticisms of trade-based explanations for increased wage inequality. One criticism is based on the 'trade-wage inequality anomaly' -a discrepancy between the standard Heckscher-Ohlin (H-O) model and the data. According to the H-O model, the relative wage of highskilled to low-skilled workers should increase in the high-skill abundant US but decrease in low-skill abundant Mexico after trade liberalization. However, as we have seen in Figures 1 and 2, the data show that the wage inequality increased along with the increase in trade in both countries in the late 1980s and early 1990s. This is the 'trade-wage inequality anomaly'.A second criticism is based on the 'price-wage anomaly' -another discrepancy between the standard H-O model and the data. In the H-O model, an increase in the relative wage of high-skilled to low-skilled workers should be driven by an increase in the relative price of high-skill to low-skill intensive goods in the high-skill abundant US. This price-wage linkage is known as the Stolper-Samuelson theorem of the in the 1980s led to an increase in the demand for high-skilled workers, who were complements for this equipment, and a decrease in the demand for low-skilled workers, wh...

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“…Other explanations for inequalities have been put forward by Van Reenen (2011) who found support for trade-induced technological change associated with inequality. Chusseau and Dumont (2012) show that globalization, skill-biased technological change and changes in labour-market institutions that have weakened the welfare state, explain a substantial portion of the increase in inequality in a group of 12 developed countries. Atkinson et al (2011) instead point out the decreases in the progressivity of taxation systems, particularly at the top of the distribution, as main drivers of inequality.…”

Section: The Rise Of Inequality In Contemporary Societiesmentioning

confidence: 99%

What is organizational inequality? Why is it increasing as macroeconomic inequality increases?

Bernardi

Tridico

2020

Capital & Class

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Inequality has been increasing for decades in both rich and developing countries and the academic literature addressing it struggles to provide explanations, let alone solutions. This article is concerned with a relatively underexplored area, the relationship between macro-level inequality and organizational inequality. The core focus of the article is the recognition that the two phenomena are closely bound up one with the other. This is made possible by adopting Rousseau’s notion of inequality as hierarchy and willingness to accept subordination to authority and disparity of treatment. In doing so, we highlight similarities and dissimilarities between Rousseau and Marx. Inequality remains an issue of hierarchy at both the macro and organizational levels. As it was for Rousseau, so it is today but it is much more layered than in Rousseau’s day: inequality in society is the accepted degree of hierarchy among its members, inequality in the economy and at work is the extent to which, accepted or not, there is an imbalance of power, financial resources, remuneration of work and access to opportunities and services. The increase in inequality is due to a radical change in the socio-economic model of advanced economies. This change involves a shift towards financialization, a pressure on labour through flexibility, the decline of trade unions’ power and the retrenchment of public social spending.

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Growing Income Inequalities in Advanced Countries

Cited by 9 publications

References 95 publications

Economic growth, welfare models and inequality in the context of globalisation

Economic growth, welfare models and inequality in the context of globalisation

A Survey of Trade and Wage Inequality: Anomalies, Resolutions and New Trends

What is organizational inequality? Why is it increasing as macroeconomic inequality increases?

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