Poverty and income inequality

Inequality in big cities

Kristian Behrens, Frédéric Robert-Nicoud, 24 July 2014

Large cities are more unequal than the nations that host them. This column argues that this is because large cities disproportionately reward talented superstars and disproportionately ‘fail’ the least talented. Cities should thus be the primary focus of policies to reduce inequality and its adverse consequences for society.

Pension reform and equity

Benedict Clements, Csaba Feher, Sanjeev Gupta, 17 July 2014

The discussion on pension reform typically centres on fiscal sustainability. This column argues that equity concerns are of primary importance, both in selling proposed reforms to the public, and as a first-order policy goal of the pension system. Focusing on the average pensioner is insufficient to evaluate policy.

Why does inequality grow?

Coen Teulings, 15 June 2014

Income inequality has increased worldwide in recent years. This column discusses the role of technological progress, globalisation, and the liberalisation of labour-market institutions in this growing inequality. The liberalisation of labour market institutions has made labour markets more flexible and created many jobs. But beyond a certain point, the net effect of further liberalisation might be negative for society.

Wage compression and falling Latin American inequality

Eduardo Levy Yeyati, Samuel Pienknagura, 10 June 2014

Latin America’s inequality has fallen, driven by a reduction in the educational wage premium. This column discusses potential driving forces behind this phenomenon and argues that while this is a positive outcome, it may reflect a deeper malaise. A preliminary evaluation suggests that supply changes are more important than de-industrialisation. But lacklustre PISA scores support a more dismal hypothesis. The premium decrease may mirror a decline in education quality.

Piketty’s ‘Second Law of Capitalism’ vs. standard macro theory

Per Krusell, Tony Smith, 1 June 2014

Thomas Piketty’s new book has been widely praised for its empirical contribution, but his prediction of rising inequality rests on economic theory. This column argues that Piketty’s pessimistic forecast is based on an extreme – and unrealistic – assumption about households’ saving behaviour. According to standard theory, the wealth–income ratio would increase only modestly as growth falls, so declining growth would not be a powerful force for generating high inequality.

Other Recent Articles:

Vox eBooks