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Inequality and Poverty in the United States: Public Policies for Inclusive Growth

  • Oliver Denk
  • Robert P. Hagemann
  • Patrick Lenain
  • Valentin Somma

Income inequality and relative poverty in the United States are among the highest in the OECD and have substantially increased over the past decades. These developments have been associated with a number of other worrying statistics, including low intergenerational social mobility and weak real income growth for many households. A more inclusive pattern of growth would require less pronounced gaps in outcomes and opportunities across social groups and a broader sharing of the benefits of growth. The present paper analyses the causes of US income inequality and relative poverty in an OECD context, especially the role of the tax-and-transfer system, and suggests public policies to promote inclusive growth. To a significant degree, high income inequality is attributable to the large dispersion of earned income, which should be addressed by reforming education, so as to provide disadvantaged students with the skills needed to fully realise their potential. In addition, taxes and transfers contribute less to income redistribution than in other OECD countries. If well designed, reforms that promote inclusive growth could also help reduce the market distortions resulting from the current tax-and-transfer system. In particular, phasing out personal and corporate tax expenditures that disproportionately benefit high earners would lower income inequality and improve resource allocation. As well, social transfers could be more effective in alleviating poverty through better targeting of the truly needy while reducing administrative complexity. Inégalités et pauvreté aux États-Unis : Des politiques publiques en faveur d'une croissance inclusive Les inégalités de revenus et la pauvreté relative aux États-Unis sont parmi les plus élevées de l’OCDE et se sont considérablement accentuées au cours des dernières décennies. Ces phénomènes se doublent d’un certain nombre d’autres données préoccupantes, notamment la faiblesse de la mobilité sociale intergénérationnelle et l’évolution du revenu réel de nombreux ménages. Une structure de croissance plus inclusive impliquerait de combler les écarts dans la situation et les opportunités offertes aux différents groupes sociaux et un plus large partage des bénéfices de la croissance. La présente étude passe en revue les causes des inégalités de revenus et de la pauvreté relative aux États- Unis par rapport aux pays de l’OCDE, notamment le rôle du système de prélèvements et de prestations, et propose des mesures pour promouvoir une croissance mieux partagée. L’ampleur des inégalités de revenus s’explique dans une large mesure par la forte dispersion des revenus du travail, à laquelle il faudrait s’attaquer en réformant l’éducation pour que les étudiants issus de milieux défavorisés puissent acquérir les compétences dont ils ont besoin pour réaliser pleinement leur potentiel. En outre, le système de prélèvements et de prestations contribue moins à la redistribution du revenu que dans d’autres pays de l’OCDE. À condition d’être bien étudiées, des réformes favorisant une croissance inclusive pourraient également aider à réduire les distorsions de marché induites par le système actuel de prélèvements et de prestations. En particulier, la suppression progressive des dépenses fiscales en faveur des particuliers et des entreprises, qui favorisent les hauts revenus de manière disproportionnée, aurait pour effet d’atténuer les inégalités de revenus et d’améliorer l’allocation des ressources. De même, les transferts sociaux pourraient être employés plus efficacement à faire reculer la pauvreté si l’on ciblait mieux les bénéficiaires réellement nécessiteux tout en réduisant la complexité administrative des programmes.

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 1052.

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Date of creation: 27 May 2013
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Handle: RePEc:oec:ecoaaa:1052-en
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