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Income Inequality in the European Union

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  • Kaja Bonesmo Fredriksen

    (OECD)

Abstract

Poor growth performance over the past decades in Europe has increased concerns for rising income dispersion and social exclusion. European authorities have recently launched the Europe 2020 strategy which aims to improve social inclusion in Europe on top of already existing European regional policies aiming to reduce regional disparities through stimulating growth in areas where incomes are relatively low. While it is most common to confine measures of inequality to national borders, the existence of such union-wide objectives and policies motivates measuring income dispersion among all Europeans in this paper. Towards the end of the 2000s the income distribution in Europe was more unequal than in the average OECD country, albeit notably less so than in the United States. It is the within-country, not the between-country dimension, which appears to be most important. Inequality in Europe has risen quite substantially since the mid 1980s. While the EU enlargement process has contributed to this, it is not the only explanation since inequality has also increased within a “core” of 8 European countries. Large income gains among the 10% top earners appear to be a main driver behind this evolution. L'inégalité des revenus dans l'Union européenne La faible croissance en Europe au cours des dernières décennies a augmenté les inquiétudes concernant la répartition des revenus et l’exclusion sociale. Les autorités européennes ont récemment lancé la stratégie Europe 2020 qui vise à améliorer l’insertion sociale en Europe en plaçant cet objectif au dessus des politiques régionales européennes déjà existantes afin de réduire les disparités régionales en stimulant la croissance dans les zones où les revenus sont relativement bas. Alors que l’inégalité est, le plus fréquemment, mesurée par pays, le fait de mettre en place des objectifs et des politiques à l’échelle européenne explique pourquoi ce rapport traite de l’inégalité des revenus entre tous les Européens. Vers la fin des années 2000, la distribution des revenus en Europe était plus inégalitaire que la moyenne de la zone de l’OCDE mais beaucoup moins qu’aux États-Unis. Ce sont les inégalités à l’intérieur des pays et non entre pays qui semblent le plus importantes. L’inégalité en Europe a sensiblement augmenté depuis la moitié des années 80. Même si l’élargissement a contribué à cette hausse, ce n’est pas la seule explication puisque l’inégalité a aussi augmenté au sein d’un groupe de 8 pays faisant parti de l’Union sur toute la période considérée. D’importants gains de revenus pour les 10% les mieux rémunérés apparaissent comme étant la raison principale de cette évolution.

Suggested Citation

  • Kaja Bonesmo Fredriksen, 2012. "Income Inequality in the European Union," OECD Economics Department Working Papers 952, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:952-en
    DOI: 10.1787/5k9bdt47q5zt-en
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    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Z18 - Other Special Topics - - Cultural Economics - - - Public Policy

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