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Long-Term Trends in Income Distribution

Author

Listed:
  • Jomo, K.

    (Institute of Strategic and International Studies, Kuala Lumpur, Malaysia)

  • Popov, V.

    (Central Economics and Mathematics Institute, Russian Academy of Sciences, Moscow, Russia)

Abstract

Income and wealth inequalities in most countries - in the West, the former communist economies and in many developing states - have been growing in the last three decades. Inequalities in the late XIX century were much higher than before the rise of workers' movements in the West and the 1917 Bolshevik Revolution, the strong inequalities of the previous century declined for over half a century until the 1980s as the threat of communism spreading inspired welfare redistributive reforms, giving capitalism 'a more human face'. But these checks and balances have greatly weakened in recent decades, especially after the fall of the Berlin Wall, and the growth of inequalities resumed in most developed and many developing countries with some notable exceptions (Latin America). This article discusses long term past and possible future trends in inequality. High inequalities are associated with an array of negative consequences, which lower the competitiveness of societies and countries, especially at higher stages of development. Inequalities cannot grow endlessly, there is probably a critical level of inequality, and if it is exceeded, national states descend into turmoil of social conflicts and fall apart. If the growth of income inequalities continues, then countries can get into the bad stable equilibrium trap that reproduces itself: poor quality of state institutions, low growth, low social mobility, high social tensions. Gradual reforms could help overcoming the trap, but if they are delayed, the further growth of inequalities could lead to social revolution.

Suggested Citation

  • Jomo, K. & Popov, V., 2016. "Long-Term Trends in Income Distribution," Journal of the New Economic Association, New Economic Association, vol. 31(3), pages 146-160.
  • Handle: RePEc:nea:journl:y:2016:i:31:p:146-160
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    References listed on IDEAS

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    1. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 465-490.
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    5. Milanovic, Branko, 2007. "Where in the world are you? Assessing the importance of circumstance and effort in a world of different mean country incomes and (almost) no migration," MPRA Paper 3420, University Library of Munich, Germany.
    6. Popov, Vladimir, 2014. "Mixed Fortunes: An Economic History of China, Russia, and the West," OUP Catalogue, Oxford University Press, number 9780198703631.
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    8. Milanovic, Branko, 2012. "Global income inequality by the numbers : in history and now --an overview--," Policy Research Working Paper Series 6259, The World Bank.
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    10. Jeffrey G. Williamson, 2009. "History without Evidence: Latin American Inequality since 1491," NBER Working Papers 14766, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Grigoryev, L., 2016. "Social Inequality in the World - the Interpretation of Not-Evident Tendencies," Journal of the New Economic Association, New Economic Association, vol. 31(3), pages 160-170.

    More about this item

    Keywords

    income and wealth inequalities; communism; capitalism; welfare state; share of labour and capital in national income;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • N00 - Economic History - - General - - - General

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