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Less Income Inequality and More Growth – Are They Compatible? Part 1. Mapping Income Inequality Across the OECD

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Listed:
  • Peter Hoeller

    (OECD)

  • Isabelle Joumard

    (OECD)

  • Mauro Pisu

    (OECD)

  • Debra Bloch

    (OECD)

Abstract

Countries differ widely with respect to the level of labour income inequality among individuals of working age. Labour income inequality is shaped by differences in wage rates, hours worked and inactivity rates. Individual labour income inequality is the main driver of household market income inequality, with family formation as well as self-employment and capital income dispersion playing a smaller role. Household disposable income dispersion is lower in all OECD countries than household market income inequality, due to the redistributive effect of tax and transfer systems, but redistribution differs widely across countries. This paper maps income inequality for all OECD countries across various inequality dimensions and summarises them in inequality outcome diamonds. It also provides a cluster analysis that identifies groups of countries that share similar inequality patterns. Moins d'inégalités de revenu et plus de croissance – Ces deux objectifs sont-ils compatibles?: Partie 1. Cartographie des inégalités de revenu dans les pays de l'OCDE Les inégalités des revenus du travail entre les personnes en âge de travailler varient largement selon les pays. Elles reflètent les écarts de salaire, de nombre d‘heures ouvrées et de taux d‘inactivité. Ces inégalités sont le principal facteur d‘inégalité du revenu marchand des ménages, la composition de la famille, l‘emploi indépendant et la répartition des revenus du capital jouant un moindre rôle. La répartition du revenu disponible des ménages dans tous les pays de l‘OCDE est moins importante que l‘inégalité du revenu marchand des ménages en raison de l‘effet redistributif de l‘impôt et des systèmes de transfert, mais cette redistribution est très variable selon les pays. Ce document dresse une cartographie des inégalités de revenu dans tous les pays de l‘OCDE en distinguant les différentes composantes de revenus et en les synthétisant sous forme de figures en diamant rendant compte des résultats obtenus. Il présente en outre une analyse par clusters mettant en évidence les groupes de pays ayant en commun les mêmes structures d‘inégalité.Countries differ widely with respect to the level of labour income inequality among individuals of working age. Labour income inequality is shaped by differences in wage rates, hours worked and inactivity rates. Individual labour income inequality is the main driver of household market income inequality, with family formation as well as self-employment and capital income dispersion playing a smaller role. Household disposable income dispersion is lower in all OECD countries than household market income inequality, due to the redistributive effect of tax and transfer systems, but redistribution differs widely across countries. This paper maps income inequality for all OECD countries across various inequality dimensions and summarises them in inequality outcome diamonds. It also provides a cluster analysis that identifies groups of countries that share similar inequality patterns.

Suggested Citation

  • Peter Hoeller & Isabelle Joumard & Mauro Pisu & Debra Bloch, 2012. "Less Income Inequality and More Growth – Are They Compatible? Part 1. Mapping Income Inequality Across the OECD," OECD Economics Department Working Papers 924, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:924-en
    DOI: 10.1787/5k9h297wxbnr-en
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    2. Christian Daude, 2016. "Structural reforms to boost inclusive growth in Greece," OECD Economics Department Working Papers 1298, OECD Publishing.
    3. Paul Eckerstorfer & Johannes Halak & Jakob Kapeller & Bernhard Schütz & Florian Springholz & Rafael Wildauer, 2016. "Correcting for the Missing Rich: An Application to Wealth Survey Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(4), pages 605-627, December.
    4. Stéphanie Jamet & Thomas Chalaux & Vincent Koen, 2013. "Labour Market and Social Policies to Foster More Inclusive Growth in Sweden," OECD Economics Department Working Papers 1023, OECD Publishing.
    5. Boris Cournède & Antoine Goujard & Álvaro Pina, 2013. "How to Achieve Growth- and Equity-friendly Fiscal Consolidation?: A Proposed Methodology for Instrument Choice with an Illustrative Application to OECD Countries," OECD Economics Department Working Papers 1088, OECD Publishing.
    6. Balázs Égert, 2013. "The Efficiency and Equity of the Tax and Transfer System in France," OECD Economics Department Working Papers 1038, OECD Publishing.
    7. Martner Fanta, Ricardo & Gonzales, Ivonne & Podestá, Andrea, 2013. "Políticas fiscales para el crecimiento y la igualdad," Macroeconomía del Desarrollo 5372, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    8. Fernandes, Cristina & Fernandes, Cristina & Crespo, Nuno & Simoes, Nadia, 2016. "Poverty, richness, and inequality: Evidence for Portugal using a housing comfort index," Journal of Economic and Social Measurement, IOS Press, issue 4, pages 371-394.
    9. Łukasz Rawdanowicz & Eckhard Wurzel & Ane Kathrine Christensen, 2013. "The Equity Implications of Fiscal Consolidation," OECD Economics Department Working Papers 1013, OECD Publishing.
    10. Nádia Simões & Nuno Crespo & Sandrina B. Moreira & Celeste A. Varum, 2016. "Measurement and determinants of health poverty and richness: evidence from Portugal," Empirical Economics, Springer, vol. 50(4), pages 1331-1358, June.
    11. Kaja Fredriksen, 2020. "Does occupational licensing impact incomes? A replication study for the German crafts case," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-17, December.
    12. Arcanjo, M. & Bastos, A. & Nunes, F. & Passos, J., 2013. "Child poverty and the reform of family cash benefits," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 43(C), pages 11-23.
    13. Paul Eckerstorfer & Johannes Halak & Jakob Kapeller & Bernhard Schütz & Florian Springholz & Rafael Wildauer, 2014. "Die Vermögensverteilung in Österreich und das Aufkommenspotenzial einer Vermögenssteuer," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 40(1), pages 63-81.
    14. Vassiliki Koutsogeorgopoulou & Manos Matsaganis & Chrysa Leventi & Jan-David Schneider, 2014. "Fairly Sharing the Social Impact of the Crisis in Greece," OECD Economics Department Working Papers 1106, OECD Publishing.
    15. Paul Eckerstorfer & Johannes Halak & Jakob Kapeller & Bernhard Schütz & Florian Springholz & Rafael Wildauer, 2014. "Correcting wealth survey data for the missing rich: The case of Austria," Economics working papers 2014-01, Department of Economics, Johannes Kepler University Linz, Austria.
    16. Isabelle Joumard & Mauro Pisu & Debbie Bloch, 2012. "Tackling income inequality: The role of taxes and transfers," OECD Journal: Economic Studies, OECD Publishing, vol. 2012(1), pages 37-70.
    17. Maura Francese & Mr. Carlos Mulas-Granados, 2015. "Functional Income Distribution and Its Role in Explaining Inequality," IMF Working Papers 2015/244, International Monetary Fund.
    18. Isabelle Joumard & Juliana Londoño Vélez, 2013. "Income Inequality and Poverty in Colombia - Part 1. The Role of the Labour Market," OECD Economics Department Working Papers 1036, OECD Publishing.
    19. Isabelle Joumard & Mauro Pisu & Debra Bloch, 2012. "Less Income Inequality and More Growth – Are They Compatible? Part 3. Income Redistribution via Taxes and Transfers Across OECD Countries," OECD Economics Department Working Papers 926, OECD Publishing.
    20. Henrik Braconier & Jenifer Ruiz-Valenzuela, 2014. "Gross Earning Inequalities in OECD Countries and Major Non-member Economies: Determinants and Future Scenarios," OECD Economics Department Working Papers 1139, OECD Publishing.
    21. Fredriksen, Kaja, 2018. "Does occupational licensing impact incomes? - The German crafts case," ifh Working Papers 11 (2018), Volkswirtschaftliches Institut für Mittelstand und Handwerk an der Universität Göttingen (ifh), revised 2018.

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    More about this item

    Keywords

    analyse par clusters; bien-être; cluster analysis; inequality; inégalité; pauvreté; poverty; welfare;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • D30 - Microeconomics - - Distribution - - - General
    • D6 - Microeconomics - - Welfare Economics
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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