The Economics of Rising Inequalities

This book is an in-depth discussion of rising inequalities in the western world. It explores the extent to which rising inequalities are the mechanical consequence of changes in economic fundamentals (such as changes in technological or demographic parameters), and to what extent they are the contingent consequences of country-specific and time-specific changes in institutions. Both the 'fundamentalist' view and the 'institutionalist' view have some relevance. For instance, the decline of traditional manufacturing employment since the 1970s has been associated in every developed country with a rise of labor-market inequality (the inequality of labor earnings within the working-age population has gone up in all countries), which lends support to the fundamentalist view. But, on the other hand, everybody agrees that institutional differences (minimum wage, collective bargaining, tax and transfer policy, etc.) between Continental European countries and Anglo-Saxon countries explain why disposable income inequality trajectories have been so different in those two groups of countries during the 1980s-90s, which lends support to the institutionalist view. The chapters in this volume show the strength of both views. Through empirical evidence and new theoretical insights the contributors argue that institutions always play a crucial role in shaping inequalities, and sometimes preventing them, but that inequalities across age, sex, and skills often recur. From Sweden to Spain and Portugal, from Italy to Japan and the USA, the volume explores the diversity of the interplay between market forces and institutions. Contributors to this volume - Daron Acemoglu (MIT) Manuel Arellano (CEMFI) Roland Benabou (New York University) Samuel Bentolila (CEMFI) Anders Bjorkland (Stockholm University) Richard Blundell (University College London) Olympia Bover (Banco de Espana) Andrea Brandolini (Bank of Italy) Giorgio Brunello (Padua University, Italy) Olga Canto (Universidad de Vigo) Ana R. Cardoso (Universidade do Minho) Piero Cippollone (Bank of Italy) Peter Gottschalk (Boston College) John Hassler (Stockholm University) Tsuneo Ishikawa (University of Tokyo) Juan F. Jimeno (Universidad de Alcala FEDEA; CEPR) Susan E. Mayer (University of Chicago) Javier Ortega (Universite des Sciences Sociales de Toulouse) Marten Palme (Stockholm School of Economics) Ian Preston (University College London) Jose V. Rodriguez Mora (Universitat Pompeu Fabra, Barcelona) Paolo Sestito (Bank of Italy) Kjetil Storesletten (Stockholm University) Etienne Wasmer (ECARE; CEPR) Fabrizio Zilibotti (Stockholm University)