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The systemic nature of the rise in inequality in developed economies

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  • Pascal Petit

Abstract

The rise in inequality in the last two decades has affected most developed economies. The systemic nature of this inequality is the focus of this paper. A combination of product market internationalization, financial globalization and technological changes favoring large organizations created asymmetric pressure on the two ends of the distribution of market incomes, resulting in greatly increased inequality. A widespread credo of political liberalism prevented governments from using taxes and transfers to check this rise in income inequality. Changes in relative prices and borrowing facilities brought some support to the standards of living of low-income groups but also contributed to increased instability of these economies. The global financial crisis was one of the possible crisis scenarios that rising inequality was bound to produce. The paper assesses the cumulative factors behind the rise in inequality. These factors reduce the capacity of industrial economies to face the challenges of ever-changing environments.

Suggested Citation

  • Pascal Petit, 2010. "The systemic nature of the rise in inequality in developed economies," International Review of Applied Economics, Taylor & Francis Journals, vol. 24(3), pages 251-267.
    • Handle: RePEc:taf:irapec:v:24:y:2010:i:3:p:251-267
    DOI: 10.1080/02692171003701396
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    References listed on IDEAS

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    Cited by:

    1. Leena Kalliovirta & Tuomas Malinen, 2020. "Non‐Linearity and Cross‐Country Dependence of Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(1), pages 227-249, March.
    2. Filippo Gusella & Anna Maria Variato, 2021. "Financial Instability and Income Inequality: why the connection Minsky-Piketty matters for Macroeconomics," Working Papers - Economics wp2021_15.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    3. Cong S. Pham & Mehmet Ali Ulubaşoğlu, 2016. "The role of endowments, technology and size in international trade: new evidence from product-level data," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(7), pages 913-937, October.
    4. Paolo Ramazzotti, 2013. "Shared economic thought and the neglect of social costs. Why progressive economists often stick to conventional wisdom," Working Papers 71-2013, Macerata University, Department of Finance and Economic Sciences, revised Dec 2015.

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