2022
DOI: 10.1257/app.20200703
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Why Is Europe More Equal than the United States?

Abstract: This article combines all available data to produce pretax and post-tax income inequality series in 26 European countries from 1980 to 2017. Our estimates are consistent with macroeconomic growth and comparable with US distributional national accounts. Inequality grew in nearly all European countries, but much less than in the US. Contrary to a widespread view, we demonstrate that Europe’s lower inequality levels cannot be explained by more equalizing tax and transfer systems. After accounting for indirect tax… Show more

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Cited by 43 publications
(68 citation statements)
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References 41 publications
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“…Thus it appears that countries with higher CBC have both high effective wage floors and compact wage distributions. This is consistent with decades of inequality research finding that high CBC contributes in particular to the compression of gross wages (the pre-distribution), leaving less work for redistributive institutions to level out the playing field in terms of net disposable income inequality (Blanchet et al 2021, Howell 2021).…”
Section: Descriptive Resultssupporting
confidence: 83%
“…Thus it appears that countries with higher CBC have both high effective wage floors and compact wage distributions. This is consistent with decades of inequality research finding that high CBC contributes in particular to the compression of gross wages (the pre-distribution), leaving less work for redistributive institutions to level out the playing field in terms of net disposable income inequality (Blanchet et al 2021, Howell 2021).…”
Section: Descriptive Resultssupporting
confidence: 83%
“…For the middle 40%, income shares are very similar across the three countries, although across the entire period, France has the highest income share and the US the lowest, and the gap widened slightly between 1991 and 2018. Recent work shows that if Europe is less unequal than the US, it has more to do with lower levels of pre-tax income inequality than with more equalizing tax-and-transfer systems (Blanchet et al 2022). We can draw the same conclusion for Australia.…”
Section: Stata Graph Intcomp_ Ptninc_sh2supporting
confidence: 64%
“…It is striking that the poorest half of the population in the United States has emission levels comparable with the European middle 40%, despite being almost twice as poor as this group in purchasing power parity terms 17 . Conversely, the top 10% of the population in East Asia emits notably more than its European counterpart (40 tCO 2 e vs 29 tCO 2 e, respectively).…”
Section: Resultsmentioning
confidence: 99%