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Über dieses Buch

This book is the fifteenth volume in the renowned International Papers in Political Economy (IPPE) series which explores the latest developments in political economy. Containing contributions by experts in the field, this book focuses on topics that address the ongoing debate of inequalities in economic systems. Inequality has been considered a problem by many academics and policy makers for a long time now and recently here has been some evidence of increasing inequalities in society. Contributors to this book focus on the causes and consequences of inequality along with the importance of tackling inequality and recommend potential policies to reduce it, for example tax reforms. The book covers different aspects of inequality - from income to gender - and explores links between inequality and economic growth, and financialisation and financial crisis.

Inhaltsverzeichnis

Frontmatter

Importance of Tackling Income Inequality and Relevant Economic Policies

This contribution discusses the importance of tackling income inequality, a very serious occurrence over the last forty years or so. Economic policy initiatives to produce a more equal distribution of income thereby become relevant and urgent. Not only would such policies reduce inequalities but would also contribute to the increase of the level of economic activity, as this has been well demonstrated many times. Relevant economic policies for this purpose are briefly discussed in this contribution. Inequality emerged in view of the members of the very top of the income distribution gained at the expense of wage earners; and in the financial sector in particular, which was one of the main causes of the Global Financial Crisis (GFC) of 2007/2008. Wealth and gender inequalities are important in this respect, but they need separate contributions to deal with satisfactorily; we refer to them as necessary. Relevant contributions are included in this publication.

Philip Arestis

Financialisation, Financial Crisis and Inequality

This chapter outlines how the pace and structure of financialisation have differed over time and across countries, and also how income distribution (inequality of personal income, distribution between wages and profits) has proceeded with different time profiles and structures. This chapter outlines the nature and features of financialisation in the present era, and provides a summary of the main trends in income distribution and inequality over the past three decades. The links between the financial sector and inequality of income and earnings are explored, and specifically the extent of inequality within the financial sector and the degree to which inequality in the financial sector contributes to overall inequality. The evidence on the processes of financialisation and the distribution of income is reviewed. The ways in which financial deepening can impact on inequality and poverty are explored. The links between inequality and financial crisis and household debt are reviewed.

Malcolm Sawyer

Inequality and Growth: Marxian and Post-Keynesian/Kaleckian Perspectives on Distribution and Growth Regimes Before and After the Great Recession

The re-distribution of income from labour to capital, from workers to top-managers and from low income households to the rich has been an important feature of finance-dominated capitalism since the early 1980s. After the Great Financial Crisis and the Great Recession in 2007−9, the recovery has been sluggish so far, and this has given rise to a renewed discussion about stagnation tendencies in capitalist economies. In orthodox approaches, income distribution only has a restricted role to play, if at all, but the interaction between distribution and growth is at the centre of Marxian and post-Keynesian/Kaleckian approaches when it comes to explaining medium- to long-run trends of economic growth—and stagnation. This contribution thus provides Marxian and Kaleckian assessments of the distribution and growth regimes under finance-dominated capitalism, both before and after the recent crisis. Finally, an interpretation of stagnation tendencies in a demand-led endogenous growth model with Kaleckian, Kaldorian and Marxian features is presented.

Eckhard Hein

Theoretical and Empirical Analyses of the Rise of Income Inequality in Rich Countries

The objective of this chapter is to review, both theoretically and empirically, the main determinants behind the rise in income inequality that OECD countries have experienced over the last three decades. We will show evidences according to which the financialisation of economies along with globalisation generated the main mechanism, which allowed for income inequality increase. These processes have taken place at least since 1990, when labour flexibility intensified, labour market institutions weakened as trade unions lost power, and public social spending started to retrench and did not compensate for the many vulnerabilities created by the globalisation process. In this context, wage share declined and functional income distribution worsened with an increase of profits, rents and financial compensation. A favourable tax policy towards riches, payments of dividends and the structural change occurred in most advanced economies, i.e. a gradual abandonment of manufacturing in favour of services, also contributed to this result.

Pasquale Tridico, Riccardo Pariboni

Can Tax Reforms Reduce Inequality?

This chapter examines the impact of tax reforms on inequality. It begins with an examination of the meaning of inequality and its dimensions. While the usual division of 1% and 99% has its own merit, this chapter argues that the situation is more complex, especially among the 99%. The real income of those in the middle of the distribution has also stagnated in recent decades. On the other hand, primarily due to inadequate investment, growth rate in most economies has been sluggish. This chapter focuses on policies to reduce inequality and proposes two sets of reforms. First, given the regressive nature of indirect taxation, the balance between direct and indirect taxation should alter. The second set of reforms should try to make our tax system more efficient. To be more effective, the size and composition of fiscal intervention should change and more resources should become available to tackle inequality.

Ahmad Seyf

Gender Inequality in the Labour Market and the Great Recession

The study of labour market gender inequalities has been and still is an issue of major relevance. Although gender equality has become a goal in political agendas worldwide, there is empirical evidence showing the persistence of gender differences. The gender employment and unemployment gaps and the ‘gender pay gap’ support this persistence. Additionally, during the last decade, the Great Recession has exerted a detrimental impact on labour market outcomes not only in the European Union in general but also in some specific countries in particular. In this contribution, we shed light on the evolution of this labour market dimension of gender inequalities during the Great Recession, both in the EU in general and in a set of selected countries: France, Germany, Italy, Spain and the UK.

Patricia Peinado, Felipe Serrano

Rich Become Richer and Poor Become Poorer: A Wealth Inequality Approach from Great Britain

This paper discusses the distribution of wealth along with the phenomenal changes in wealth inequality worldwide; focusing, however, on Great Britain over the previous decade. By making use of the Wealth and Assets Survey (WAS), put together in Great Britain in waves from July 2006 to June 2014, we identify the main outcomes of the wealth distribution across time and space, i.e. the government office regions of the country. In our empirical analysis, we use house prices across the regions of Great Britain to identify their effect on the evolution of wealth inequality. Our results confirm that property wealth, and hence house prices, significantly affect inequality across the different groups of the wealth distribution. Moreover, among other findings, wealth is increasingly owned by those who can afford to buy real properties, while those who cannot, they observe their wealth decreasing sharply. Models have been tested for robustness across several specifications.

Dimitra Kavarnou, Nikodem Szumilo

Why Has Income Inequality Been Neglected in Economics and Public Policy?

Commentators say that Trump’s victory has stimulated a wide debate about long-festering issues of class, race, gender, and democracy. The obvious question, then, is why these ‘long-festering issues’ have received limited attention before now. This chapter focuses on why income inequality, in particular, has been neglected by economists and policy makers even as it has risen in most of the West over the past three decades. We begin with the deep causes of neglect rooted in the shift of western capitalism from ‘control of capital’ in social democracy to ‘control by (highly concentrated) capital’ in oligarchic neoliberal democracy. We continue with why the middle classes have acquiesced for decades as income concentration rises; and go on to conservative neoliberal ideology, right-wing think tanks, and centre-left political tactics. Finally, we discuss professional economics, and the way that the paradigm of the neoclassical mainstream has occluded rising inequality as a social or economic problem.

Robert H. Wade, Michele Alacevich

Backmatter

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