Income Inequality and Social Outcomes: Bivariate Correlations at NUTS1 Level

Abstract

The last two decades have been marked by a growing concern about rising inequality. In a recent book (2012), Joseph Stiglitz, a former Nobel prize winner in Economics argues that rising income inequality is one of the main factors underlying the economic and financial crisis in the United States. The Economist magazine has al so recently devoted a special report on income inequality in the world (issue 13th‐ 19th October 2012). The social and e conomi c challenge s associated with rising income inequalities have gained prominence in the public debate, after the publication in 2009, of a widely cited book by Richard Wilkinson and Kate Pickett entitled ‘‘The Spirit Level, Why More Equal Societies Almost Always Do Better. Using cross‐ national data, the authors show that income inequality correlates with lower levels of social capital as well as with a host of other social challenge s from poor health, crime, to underage pregnancies. The current report takes part in this debate by examining the bivariate correlations at subnational level (NUTS 1 level) between income inequality and indicators of education, health, criminality, political participation, social capital and happiness at the EU level. Findings suggest a statistically significant negative relationship between income inequality and recorded voter turnout and participation in voluntary organizations, used as a proxy of social capital; while a significant positive correlation between inequality and crime rates as well as the percentage of early school leavers. On the contrary, rising income inequality seems not to be associated with health and wellbeing indicators.