Volatile top income shares in Switzerland? Reassessing the evolution between 1981 and 2009

Reto Foellmi, Isabel Martínez 31 August 2014

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The evolution of inequality in income and wealth has attracted substantial attention in recent decades. Academics have been trying to capture the relation between distribution and growth patterns – most recently and prominently Piketty (2014) in his widely discussed book Capital in the Twenty-First Century. Research on income distributions has notably focused on the top of the earnings distribution, in particular because changes in the very top incomes account for a large part of overall inequality in quantitative terms.

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Topics:  Europe's nations and regions Poverty and income inequality

Tags:  Switzerland, Inequality, income inequality, wealth inequality

Inheritance flows in Sweden, 1810–2010

Jesper Roine, Henry Ohlsson, Daniel Waldenström 08 August 2014

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Thomas Piketty’s book Capital in the Twenty-First Century (Piketty 2014) has received enormous attention since its publication. A fundamental question raised is whether a person’s lifetime income is the result of his or her own efforts or, alternatively, founded on inheritance. Even for those who believe that inequality does not matter as long as it is based on one’s own effort, the potential of a return to high levels of inequality based on inheritance is a totally different matter. To many people, such a development would be much less acceptable than increased inequality per se.

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Topics:  Economic history Europe's nations and regions Poverty and income inequality

Tags:  Sweden, Inequality, inheritance, wealth, capital, capital accumulation

Sourcing foreign inputs to improve firm performance

Maria Bas, Vanessa Strauss-Kahn 14 July 2014

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Should trade policy fight or promote imports of intermediate inputs? While several studies have shown the recent increase in imports of intermediate goods, their role in shaping domestic economies is not yet completely understood. Following the work of Feenstra and Hanson (1996), a large literature focuses on the impact of imported intermediate inputs on employment and inequality. It concludes that, like outsourcing, imported intermediate inputs have a role (although limited) in explaining job losses and wage reductions.

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Topics:  International trade

Tags:  employment, productivity, wages, Inequality, trade, exports, outsourcing, imports, global value chains, Intermediate inputs

Institutions, trade shocks, and regional differences in long-run educational and development trajectories

André Carlos Martínez, Aldo Musacchio, Martina Viarengo 09 July 2014

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Understanding the determinants of long-run socio-economic development is a major concern for academics and policymakers in many countries around the world. In particular, beyond understanding differences in development or educational and other outcomes across countries, the origins of within-country inequality are now a fundamental issue, given the impact inequality has on the long-run prosperity of nations.

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Topics:  Development Economic history Education

Tags:  development, education, growth, institutions, Inequality, Brazil, colonialism, trade shocks, extractive institutions

Globalisation, job security, and wages

Kerem Cosar, Nezih Guner, James R Tybout 07 July 2014

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How does increased openness to international trade affect workers’ wages and job security? This question is central to the public debate concerning the effects of globalisation, but convincing quantitative answers have been difficult to come by. One fundamental reason is that major trade liberalisation episodes have often coincided with labour reforms (Heckman and Pages 2004). Colombia is a case in point. As Figure 1 shows, this country experienced deindustrialisation, higher job turnover rates, and heightened wage inequality in the years following its 1986–1991 trade liberalisation.

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Topics:  International trade Labour markets

Tags:  productivity, unemployment, globalisation, wages, trade liberalisation, Inequality, labour market reforms, exports, Colombia, job security

Capital is not back: A comment on Thomas Piketty’s ‘Capital in the 21st Century’

Odran Bonnet, Pierre-Henri Bono, Guillaume Camille Chapelle, Étienne Wasmer 30 June 2014

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The impressive success of Thomas Piketty’s book (Piketty 2014) shows that inequality is a great concern in most countries. His claim that “capital is back”, because the ratio of capital over income is returning to the levels of the end of the 19th century, is probably one of the most striking conclusions of his 700 pages. Acknowledging the considerable interest of this book and the effort it represents, we nevertheless think this conclusion is wrong, due to the particular way capital is measured in national accounts.

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Topics:  Global economy

Tags:  house prices, housing, Inequality, rents, housing bubble, capital, wealth inequality

Is Piketty’s ‘Second Law of Capitalism’ fundamental?

Per Krusell, Tony Smith 01 June 2014

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Over the last several weeks, we have thought quite a bit about the main message in Thomas Piketty’s now world-famous book, Capital in the Twenty-First Century (Piketty 2014). We have also discussed it at great length with colleagues. In sum, at least in our departments, there has been a massive collective effort at interpreting both the material presented in the book and the background material on which the book builds. In this column we would like to present one perspective on the book that does not seem to have attracted sufficient attention in the public discussions.

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Topics:  Poverty and income inequality

Tags:  growth, Inequality, wealth, saving, savings

Global income distribution: From the fall of the Berlin Wall to the Great Recession

Christoph Lakner , Branko Milanovic 27 May 2014

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The period between the fall of the Berlin Wall and the Great Recession saw probably the most profound reshuffle of individual incomes on the global scale since the Industrial Revolution. This was driven by high growth rates of populous and formerly poor or very poor countries like China, Indonesia, and India; and, on the other hand, by the stagnation or decline of incomes in sub-Saharan Africa and post-communist countries as well as among poorer segments of the population in rich countries.

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Topics:  Global economy Politics and economics Poverty and income inequality

Tags:  democracy, income inequality, globalisation, Inequality

How unequal is the European Parliament’s representation?

Anish Tailor, Nicolas Véron 21 May 2014

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This week’s European Parliament election (22–25 May) has several unprecedented features. Most importantly, the main pan-European parties are fielding lead candidates for European Commission President. Turning the election into a presidential horse race was intended to increase electoral participation and enhance the Parliament’s democratic legitimacy, even though it remains to be seen whether voters will actually see things this way.

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Topics:  EU institutions Politics and economics

Tags:  elections, democracy, EU, Inequality, voting, European parliament, treaty change

Falling real wages in the UK

David Blanchflower, Stephen Machin 12 May 2014

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There have been unprecedented falls in real wages in the UK since the start of the recession triggered by the financial crisis of 2008. This did not happen in previous economic downturns – median real wage growth slowed down or stalled, but it did not fall. Indeed, in past recessions, almost all workers in both the lowest and highest deciles of the wage distribution experienced growing real wages. It was the unemployed who experienced almost all the pain – they lost their jobs and much of their incomes, and many were unemployed for a long time.

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Topics:  Labour markets Poverty and income inequality

Tags:  US, unemployment, wages, Inequality, UK, Great Recession, real wages

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