Reducing income inequality in Europe

Anthony Atkinson

doi:10.1186/2193-9012-2-12

Abstract

World leaders have come to recognise the challenge posed by high and rising economic inequality. This paper asks how Europe can address excessive inequality. It argues that we should learn from the lessons of history; there have been significant periods in the past when inequality fell. We can make use of economic analysis, drawing on both recent and older literatures. Inequality arises not only between skilled and unskilled workers, but also between labour and capital. In seeking solutions, we should go beyond the options currently prominent in public debate and be willing to think “outside the box”.

Highlights

In her speech to the 2013 Davos meeting, Christine Lagarde quoted Franklin Roosevelt as saying that “the test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little”
Excessive inequality is corrosive to growth; it is corrosive to society
All of us—including the IMF—have a better understanding that a more equal distribution of income allows for more economic stability, more sustained economic growth, and healthier societies with stronger bonds of cohesion and trust

Summary

Introduction

In her speech to the 2013 Davos meeting, Christine Lagarde quoted Franklin Roosevelt as saying that “the test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little” She went on to say “I was not surprised, to see that the World Economic Forum’s most recent survey puts “severe income disparity” at the very top of global risks over the decade. All of us—including the IMF—have a better understanding that a more equal distribution of income allows for more economic stability, more sustained economic growth, and healthier societies with stronger bonds of cohesion and trust. What is less clear is how we achieve more inclusive growth in practice”

Objectives

Findings

Conclusion