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2018 | Book

An Unequal World: Introduction to Wealth Inequality in the North Atlantic Anglosphere Read chapter Read first chapter

The Evolution and Determinants of Wealth Inequality in the North Atlantic Anglo-Sphere, 1668–2013

Push and Pull

Author: Prof. Livio Di Matteo

Publisher: Springer International Publishing

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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About this book

This book focuses on wealth inequality trends in the North Atlantic Anglo-sphere countries of Canada, the United Kingdom, and the United States over the period from 1668 to 2013: a wider perspective than generally used when wealth inequality is discussed. This book demonstrates that it is important to put current dimensions of wealth inequality into historical context by looking at performance over the long run rather than simply a few decades. Moreover, this contribution compiles a substantial amount of data on estimates of wealth inequality and provides a concise overview of trends as well as the drivers of inequality over the long term. It serves as a short supplementary text for economics and sociology courses on economic inequality, economic history and social change—while remaining of interest to scholars and policymakers invested in equality debates of the past and present.

Table of Contents

Frontmatter
Chapter 1. An Unequal World: Introduction to Wealth Inequality in the North Atlantic Anglosphere
Abstract
Economic inequality is a key research area, and the direction of the relationship between industrialization, economic growth, and economic inequality over time is a key question. An examination of wealth inequality in the north Atlantic Anglosphere countries of Canada, the United Kingdom, and the United States from 1668 to 2013 finds that the process of economic growth and industrialization has pushed wealth inequality upwards while other economic factors have either reinforced inequality or pulled it down. While wealth inequality is generally high, it declined over the long term and, unlike income inequality, has not experienced as pronounced a rebound in these or other developed countries since the mid-twentieth century—with the notable exception of the United States.
Livio Di Matteo
Chapter 2. Wealth Inequality and Its Historical Context
Abstract
Wealth inequality is the disparity in asset ownership. Wealth provides more economic security than income and is a better indicator of economic and political power. The long-term impact of industrialization and growth in the Kuznets Curve Hypothesis postulates an optimistic inverted u-shaped inequality-growth relationship, as opposed to Piketty’s pessimism. Evidence supports and contradicts the Kuznets curve and finds additional economic, technological, demographic, social, and institutional factors affecting the long-term distribution of both wealth and income. On balance, the studies conducted suggest that economic inequality was relatively lower in pre-industrial periods, grew during industrialization, and then appears to have been mitigated in the wake of industrialization with the advent of social security, public policy, and social investments that may have broadened wealth accumulation opportunities.
Livio Di Matteo
Chapter 3. Wealth Inequality: Facts, Figures and Approaches to Its Study
Abstract
Methodological issues include defining wealth, units of observation, biases of the data source, asset coverage, sampling, and institutional differences. Sources include survey data, estate tax data, probate, census, and income tax data. The Canadian wealth inequality figures are for 1851–2012 and come from probate records, published scholarly estimates, Statistics Canada Survey data, and federal estate tax data. The US wealth inequality estimates are for 1680–2012 and come from secondary sources using probate, census, survey, and tax data. Estimates for the United Kingdom come from primary and secondary sources for the years from 1668 to 2013, including probate and estate tax data. Inequality measures used are the Gini coefficient and the top 1 and 10 percent wealth shares.
Livio Di Matteo
Chapter 4. Understanding the Determinants of Wealth Inequality
Abstract
Determinants of inequality depend on the ability to take advantage of economic opportunities and responses to economic shocks. The Kuznets inverted u-shaped curve maintains that inequality worsens during industrialization and improves afterward. Other factors are public policy regarding taxes, including wealth taxation and government spending, labor force skills and unionization, institutions, education, resource endowments, and demographic factors such as aging and cohort size. Globalization, portfolio composition, home ownership rates, technological revolutions, changes in factor returns, wars, and economic shocks—as well as changes in economic growth patterns—are also factors. These factors can either push inequality up or pull it down with the long-term trend the outcome of a resultant between these forces, some of which exhibiting both push and pull tendencies at points in or over time.
Livio Di Matteo
Chapter 5. Examining the Evidence: Wealth Inequality in the North Atlantic Anglosphere
Abstract
Non-parametric smoothing reveals that wealth inequality was higher in the United Kingdom than the United States before industrialization, but American inequality grew to match the United Kingdom by the mid-nineteenth century. Industrialization does appear marked in all three Anglosphere countries by rising wealth inequality. Evidence for Canada, the United States, and the United Kingdom shows reduced wealth inequality starting in the twentieth century but a rebound in the United States near the end. Pooled regression models show key determinants of wealth inequality to be unionization rates, home ownership, housing policy, land policy, estate taxation, globalization, war, and also the source of data. As well, inequality in the United States and the United Kingdom is usually significantly higher than in Canada.
Livio Di Matteo
Chapter 6. Summary and Concluding Thoughts: The Persistence of Wealth Inequality
Abstract
Wealth inequality is driven by complex interacting forces and the outcome of economic change. The long-term trend in wealth inequality is for it to be pushed up by the forces of economic growth and industrialization in line with a Kuznets curve type story, but mitigating factors can pull it back down as during the twentieth century. Along with increased unionization rates, there were government policy factors such as estate taxation and the fostering of home ownership. A reduction in union strength as well as the end of estate taxation and less progressive income tax systems may be factors raising economic inequality since the 1970s, especially when combined with lower economic growth rates in relation to rates of return to capital as like with Piketty’s story.
Livio Di Matteo
Backmatter
Metadata
Title
The Evolution and Determinants of Wealth Inequality in the North Atlantic Anglo-Sphere, 1668–2013
Author
Prof. Livio Di Matteo
Copyright Year
2018
Electronic ISBN
978-3-319-89773-8
Print ISBN
978-3-319-89772-1
DOI
https://doi.org/10.1007/978-3-319-89773-8