IDEAS home Printed from https://ideas.repec.org/p/oec/stdaaa/2014-1-en.html
   My bibliography  Save this paper

Can Increasing Inequality Be a Steady State?

Author

Listed:
  • Lars Osberg

    (Dalhousie University)

Abstract

Historically, discussions of income inequality have emphasised cross-sectional comparisons of levels of inequality of income. These comparisons have been used to argue that countries with more inequality are less healthy, less democratic, more crime-infested, less happy, less mobile and less equal in economic opportunity, but such comparisons implicitly presume that current levels of inequality are steady state outcomes. However, the income distribution can only remain stable if the growth rate of income is equal at all percentiles of the distribution. This paper compares long-run levels of real income growth at the very top, and for the bottom 90% and bottom 99% in the United States, Canada and Australia to illustrate the uniqueness of the post-WWII period of balanced growth (and consequent stability in the income distribution). The ‘new normal’ of the United States, Canada and Australia is ‘unbalanced’ growth – specifically, over the last thirty years the incomes of the top 1% have grown significantly more rapidly than those of everyone else. The paper asks if auto-equilibrating market mechanisms will spontaneously equalise income growth rates and stabilise inequality. It concludes that the more likely scenario is continued unbalanced income growth. This, in turn, implies, on the economic side, consumption and savings flows which accumulate to changed stocks of indebtedness, financial fragility, and periodic macroeconomic crises; and, on the social side, to increasing inequality of opportunity and political influence. Greater economic and socio-political instabilities are therefore the most likely consequence of increasing income inequality over time. Souvent, la question des inégalités de revenu est traitée essentiellement à travers des comparaisons transversales entre les niveaux d’inégalité de revenu, et on se fonde sur ces comparaisons pour conclure que dans les pays les plus concernés, les inégalités de revenu se traduisent par un moins-disant en matière de santé, de démocratie, de criminalité, de bonheur et d’opportunités économiques. Mais ces comparaisons posent implicitement que les niveaux actuels d’inégalité sont constants. Or, la distribution des revenus ne peut être constante que si les revenus croissent au même rythme à tous les centiles de la distribution. Dans le présent document, on compare les niveaux de croissance réelle des revenus à long terme tout au sommet de l’échelle ainsi que pour les 90 % et 99 % inférieurs aux États-Unis, au Canada et en Australie afin d’illustrer la particularité propre à la période post-1945, caractérisée par une croissance équilibrée (et donc par la stabilité dans la distribution des revenus). Aux États-Unis, au Canada et en Australie, la « nouvelle norme » est celle d’une croissance « déséquilibrée » - ces trente dernières années, les revenus des 1 % les plus riches ont augmenté bien plus rapidement que tous les autres. Ce document pose la question suivante : des mécanismes d’équilibrage du marché vont-ils spontanément égaliser les taux de croissance du revenu et stabiliser l’inégalité ? Il conclut que le scenario le plus probable est la persistance d’un déséquilibre de la croissance des revenus, qui aura des répercussions économiques (variation des stocks d’endettement due à l’évolution de la consommation et de l’épargne, fragilité financière et déclenchement périodique de crises macroéconomiques) et sociales (hausse des inégalités des chances et des inégalités de poids politique). Le creusement continu des inégalités de revenu se traduira donc selon toute vraisemblance par une instabilité économique et socio-politique accrue.

Suggested Citation

  • Lars Osberg, 2014. "Can Increasing Inequality Be a Steady State?," OECD Statistics Working Papers 2014/1, OECD Publishing.
  • Handle: RePEc:oec:stdaaa:2014/1-en
    DOI: 10.1787/5jz2bxc80xq6-en
    as

    Download full text from publisher

    File URL: https://doi.org/10.1787/5jz2bxc80xq6-en
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mike Pennock, 2016. "Slower Economic Growth and Subjective Well-Being in the Canadian Context: A Discussion Paper," CSLS Research Reports 2016-09, Centre for the Study of Living Standards.
    2. Rishabh Kumar, 2015. "Savings from top incomes and accumulation in the United States context: Results from disaggregated national accounts," Working Papers 1524, New School for Social Research, Department of Economics.
    3. Jan Behringer & Till van Treeck, 2013. "Income distribution and current account: A sectoral perspective," IMK Working Paper 125-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oec:stdaaa:2014/1-en. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/stoecfr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.