The Evolution of Inequality and Social Cohesion in Europe

Abstract

Our study finds that income inequality among EU-15 citizens decreased remarkably from 1957 to 2017, with the Gini coefficient dropping by nearly 30 per cent. The process was very rapid until the mid-1980s. It then slowed gradually, to the point that inequality started rising at the beginning of the 2000s. The estimates of European income distribution and the inequality measures we compute are based on the method proposed by Sala-i-Martin (2006). This methodology overcomes the problem of the limited availability of long-term survey data on income by using income shares from the World Income Inequality Database.

The Distribution of Well-Being among Europeans

“…For the EU15, the synthetic estimates by Morrisson and Murtin (2004), Darvas (2016) and Vercelli (2018) align distributive information to national accounts but differ in method and source of real GDP series; those by Bonesmo Fredriksen 2012 2017, Filauro (2018) and Filauro and Parolin (2018) consistently point to a reduction of inequality from 2005 to 2009 followed by stability until 2015, contrary to what has been observed for the EU15. These findings square with the aggregate evidence discussed earlier, hinting at the importance of macroeconomic developments in driving inequality changes.…”

“…Appendix 2: Estimates of the EU-wide distribution Atkinson (1996) Morrisson and Murtin (2004), Vercelli (2018) and Bonesmo Fredriksen (2012) used variants of this method to derive long time series. Morrisson and Murtin (2004) considered the nine bottom decile groups and the two top vingtile groups; they calculated figures for few selected years by drawing real GDP series from Maddison (2001) and distributive shares from a database assembled at the OECD.…”

The Distribution of Well-Being Among Europeans

“…Boix (2004) applied the same method to tabulations assembled at the World Bank to derive estimates of the Gini index around 1993 and show how subsequent steps in the EU enlargement are associated with an increase in inequality. Morrisson and Murtin (2004), Vercelli (2018) and Bonesmo Fredriksen (2012) used variants of this method to derive long time series. Morrisson and Murtin (2004) considered the nine bottom decile groups and the two top vingtile groups; they calculated figures for few selected years by drawing real GDP series from Maddison (2001) and distributive shares from a database assembled at the OECD.…”

“…For the EU15, the synthetic estimates by Morrisson and Murtin (2004), Darvas (2016) and Vercelli (2018) align distributive information to national accounts but differ in method and source of real GDP series; those by Bonesmo Fredriksen (2012) do not make any adjustment to national accounts and cover only 10 countries. The calculations by Vercelli suggest a steady decline of the Gini index between the late 1950s and the 1980s; the series shows ups and downs thereafter, but in 2014 it is back to the values of the mid-1980s.…”