Growing Unequal_ - OECD

Foreword......Page 5
Acknowledgements......Page 7
Table of Contents......Page 9
Introduction......Page 17
Part I. Main Features of Inequality......Page 23
Chapter 1. The Distribution of Household Income in OECD Countries: What Are its Main Features?......Page 25
How does the distribution of household income compare across countries?......Page 26
Figure 1.1. Gini coefficients of income inequality in OECD countries, mid-2000s......Page 27
Has the distribution of household income widened over time?......Page 28
Figure 1.2. Trends in income inequality......Page 29
Table 1.1. Trends in real household income by quintiles......Page 31
Figure 1.3. Changes in the ratio of median to mean household disposable income......Page 32
Table 1.2. Gains and losses of income shares by income quintiles......Page 33
Shares of pre-tax income of the richest 1% of population......Page 34
Figure 1.4. Inequality trends for market and disposable income......Page 35
Moving beyond summary measures of income distribution: income levels across deciles......Page 36
The share of wages in value added......Page 37
Figure 1.6. Income levels across the distribution, mid-2000s......Page 38
Figure 1.7. Income levels for people at different points in the distribution, mid-2000s......Page 39
Notes......Page 40
References......Page 42
Annex 1.A1. OECD Data on Income Distribution: Key Features......Page 43
Table 1.A1.1. National sources and data adjustments......Page 45
Annex 1.A2. Additional Tables and Figures......Page 51
Table 1.A2.1. Lorenz curves’ dominance across OECD countries......Page 52
Table 1.A2.2. Levels of income inequality based on different summary measures in mid-2000s......Page 53
Table 1.A2.3. Gini coefficients from different sources......Page 54
Table 1.A2.4. Trends in different inequality measures......Page 55
Part II. Main Drivers of Inequality......Page 57
Chapter 2. Changes in Demography and Living Arrangements: Are they Widening the Distribution of Household Income?......Page 59
Cross-country differences in population structure......Page 60
Figure 2.1. Average household size across OECD countries......Page 61
Demographic differences across the income distribution......Page 62
Figure 2.2. Population pyramids in mid-2000s, by gender, age and income quintiles......Page 63
Figure 2.3. Gini coefficients of income inequality by age of individuals, 2005......Page 65
Figure 2.4. Relative income by age of individual and household type in selected OECD countries......Page 66
Figure 2.5. Shares of selected groups in the population and Gini coefficients of income inequality......Page 67
Table 2.2. Changes in income inequality assuming a constant population structure......Page 68
Figure 2.6. Relative income of individuals by age......Page 69
Figure 2.7. Relative income of individuals by household type......Page 71
Notes......Page 72
References......Page 73
Annex 2.A1. Structure of the Population in Selected OECD Countries......Page 75
Table 2.A1.1. Structure of the population in selected OECD countries......Page 76
Chapter 3. Earnings and Income Inequality: Understanding the Links......Page 79
Figure 3.1. Changes in the distribution of personal earnings and of household market income......Page 80
Main patterns in the distribution of personal earnings among full time-workers......Page 81
Figure 3.2. Trends in earnings dispersion among men working full time......Page 82
Earnings distribution among all workers: the importance of non-standard employment......Page 84
From personal to household earnings: which factors come into play?......Page 86
Figure 3.5. Concentration of household earnings by type of wage earner......Page 87
Box 3.2. What accounts for the greater inequality of spouse earnings compared to those of household heads?......Page 89
Table 3.1. Non-employment rates and share of people living in jobless households......Page 90
Figure 3.7. Inequality in the distribution of household earnings when moving from households with positive earnings to all households......Page 91
From household earnings to market income......Page 92
Table 3.2. Size and concentration of different elements of capital income, mid-2000s......Page 93
Notes......Page 94
References......Page 96
Chapter 4. How Much Redistribution Do Governments Achieve? The Role of Cash Transfers and Household Taxes......Page 99
An accounting framework for household income......Page 100
Targeting and progressivity: how do social programmes and taxes affect income distribution?......Page 101
Figure 4.1. Contribution rates to public pensions, redistributive and actuarial components, 1995......Page 103
Level and characteristics of public cash transfers and household taxes......Page 104
Table 4.2. Shares of cash benefits and household taxes in household disposable income......Page 105
Table 4.3. Progressivity of cash benefits and household taxes......Page 107
Table 4.4. Progressivity of cash transfers by programme......Page 108
Figure 4.2. Level and concentration of public cash transfers in OECD countries, mid-2000s......Page 109
Figure 4.3. Share of net public benefits in disposable income of each age group, mid-2000s......Page 110
How much redistribution is achieved through government cash benefits and household taxes?......Page 111
Figure 4.4. Differences in inequality before and after taxes and transfers in OECD countries......Page 112
Figure 4.5. Inequality-reducing effect of public cash transfers and household taxes and relationship with income inequality, mid-2000s......Page 113
Figure 4.6. Reduction in inequality due to public cash transfers and household taxes......Page 114
Figure 4.7. Changes in redistributive effects of public cash transfers and taxes over time......Page 115
Table 4.6. Effectiveness and efficiency of taxes and transfers in reducing inequality......Page 116
Redistribution towards those at the bottom of the income ladder: the interplay of size and targeting......Page 117
Table 4.7. Redistribution through cash transfers and household taxes towards people at the bottom of the income ladder, mid-2000s......Page 118
Improving measures of welfare state outcomes......Page 119
Conclusion......Page 120
Notes......Page 121
References......Page 122
Part III. Characteristics of Poverty......Page 125
Chapter 5. Poverty in OECD Countries: An Assessment Based on Static Income......Page 127
Relative income poverty......Page 128
Figure 5.1. Relative poverty rates for different income thresholds, mid-2000s......Page 129
Figure 5.2. Poverty gap and composite measure of income poverty, mid-2000s......Page 130
Changes in “absolute” poverty......Page 131
Poverty risks for different population groups......Page 132
Share of respondents attributing poverty to different factors......Page 133
Figure 5.6. Risk of relative poverty of men and women by age, OECD average, mid-2000s......Page 134
Figure 5.7. Poverty rates by household type, mid-2000s......Page 135
Poverty among people of working age: the role of paid work......Page 136
Table 5.1. Poverty rates for people of working age and for households with a working-age head, by household characteristics......Page 137
Figure 5.9. Shares of poor people by number of workers in the household where they live, mid-2000s......Page 138
Poverty among the elderly: the impact of earnings and living arrangements......Page 139
Table 5.2. Poverty rates for children and people in households with children by household characteristics......Page 140
The role of household taxes and public cash transfers in reducing income poverty......Page 141
Table 5.3. Poverty rates among the elderly and people living in households with a retirement-age head by household characteristics......Page 142
Figure 5.11. Effects of taxes and transfers in reducing poverty among the entire population, mid-2000s and changes since mid-1980s......Page 143
Figure 5.12. The effect of net transfers in reducing poverty among different groups......Page 144
Figure 5.13. Poverty rates and social spending for people of working age and retirement age, mid-2000s......Page 145
Accounting for changes in poverty rates since the mid-1990s......Page 146
Table 5.4. Decomposition of the change in poverty rates among people living in households with a working-age head by selected components......Page 147
Table 5.5. Decomposition of the change in poverty rates among people living in households with a retirement-age head by selected components......Page 148
Conclusion......Page 149
Notes......Page 150
References......Page 152
Annex 5.A1. Low-income Thresholds Used in the Analysis......Page 153
Table 5.A1.1. Low-income thresholds used in the analysis......Page 154
Annex 5.A2. Alternative Estimates of Main Poverty Indicators......Page 155
Table 5.A2.1. Comparisons of main estimates between the OECD questionnaire and alternative data sources, latest available year......Page 156
Chapter 6. Does Income Poverty Last Over Time? Evidence from Longitudinal Data......Page 157
Longitudinal data and dynamic poverty measures......Page 158
Distinguishing between temporary and persistent spells of poverty......Page 159
The composition of persistent poverty......Page 160
Figure 6.3. Risks of falling into different types of poverty by age and household type, OECD average......Page 161
Table 6.1. Risks of falling into different types of poverty by age of the individual across OECD countries......Page 162
Table 6.2. Risk of falling into different types of poverty by household type......Page 164
Table 6.3. Risk of falling into different types of poverty for singles, by gender and presence of children......Page 165
Poverty entries, exits and occurrences......Page 163
Figure 6.4. Entry and exit out of income poverty, early 2000s......Page 166
Table 6.4. Prevalence of different sequences of poverty among the income-poor in one and two of the years considered......Page 167
Events that trigger entry into poverty......Page 168
Figure 6.5. Events that trigger the entry into poverty......Page 169
Income mobility and poverty persistence......Page 170
Table 6.5. Transition matrix between income quintiles, OECD average......Page 171
Conclusion......Page 172
Table 6.7. Share of income poor in the initial year at different income levels in the final year of observation......Page 173
Notes......Page 174
References......Page 175
Chapter 7. Non-income Poverty: What Can we Learn from Indicators of Material Deprivation?......Page 179
Material deprivation as one approach to the measurement of poverty......Page 180
Box 7.1. Main empirical results from previous research on material deprivation......Page 182
Prevalence of material deprivation based on aggregate data......Page 183
Table 7.1. Share of households reporting different types of material deprivation, around 2000......Page 184
Size and characteristics of material deprivation based on individual data......Page 187
Box 7.2. Description of deprivation items used in this section......Page 188
Table 7.2. Prevalence of different forms of material deprivation......Page 190
Figure 7.2. Share of people lacking different numbers of deprivation items and mean number of items lacked......Page 191
Figure 7.3. Relative income of individuals with different numbers of deprivation items......Page 192
Figure 7.4. Risk of multiple deprivation by age of individuals......Page 193
Table 7.3. Risk of experiencing two or more deprivations for people living in households with a head of working age, by household characteristics......Page 194
Conclusion......Page 195
Notes......Page 196
References......Page 197
Annex 7.A1. Prevalence of Non-income Poverty Based on a Synthetic Measure of Multiple Deprivations......Page 199
Table 7.A1.1. Summary measure of material deprivation and income poverty based on different thresholds......Page 200
Figure 7.A1.1. The relation between a summary measure of material deprivation and income poverty headcounts......Page 201
Part IV. Additional Dimensions of Inequality......Page 203
Chapter 8. Intergenerational Mobility: Does it Offset or Reinforce Income Inequality?......Page 205
Intergenerational transmission of disadvantages: an overview......Page 206
Figure 8.1. Estimates of the intergenerational earnings elasticity for selected OECD countries......Page 207
Table 8.1. Intergenerational mobility across the earnings distribution......Page 208
Table 8.2. What explains the correlation of incomes across generations?......Page 210
Transmission of education across generations......Page 212
Table 8.3. Gaps in average achievement in mathematics scores among 15-year-olds according to various background characteristics......Page 213
Intergenerational mobility and income inequality at a point in time: what are the links?......Page 214
Figure 8.2. Intergenerational mobility, static income inequality and private returns on education......Page 215
Intergenerational transmission of disadvantage: does it matter for policies?......Page 216
Notes......Page 218
References......Page 220
Chapter 9. Publicly-provided Services: How Do they Change the Distribution of Households’ Economic Resources?......Page 225
Health care......Page 226
Box 9.1. Conceptual and methodological issues......Page 227
Figure 9.1. Public health care expenditures per capita for each age group, as a proportion of total per capita health expenditure......Page 229
Figure 9.2. Distribution of public health care expenditure across income quintiles, early 2000s......Page 230
Education......Page 231
Figure 9.3. School enrolment by age in selected OECD countries, 2003......Page 232
Social housing......Page 233
Size and composition of public services to households......Page 234
Estimates based on individual records......Page 235
Table 9.1. Inter-quintile share ratio before and after inclusion of all types of public services to households......Page 236
Box 9.2. Redistributive effects of health care based on actual use......Page 238
Inter-quintile share ratio before and after inclusion of public health expenditures based on actual use......Page 239
Table 9.2. Inter-quintile share ratio before and after inclusion of pre-primary education expenditures......Page 240
Table 9.3. Inter-quintile share ratio before and after inclusion of public expenditures on primary, secondary and tertiary education......Page 241
Estimates based on grouped data......Page 242
Figure 9.5. Income inequality before and after inclusion of expenditures on public services in OECD countries......Page 243
Table 9.4. Inter-quintile share ratio before and after inclusion of expenditure on all public services......Page 245
Figure 9.7. Redistributive impact of in-kind public services compared to that of household taxes and cash benefits......Page 246
Conclusion......Page 247
Notes......Page 248
References......Page 251
Chapter 10. How is Household Wealth Distributed? Evidence from the Luxembourg Wealth Study......Page 255
Household wealth and social policies......Page 256
Basic LWS measures and methodology......Page 258
Table 10.1. Household asset participation......Page 260
Table 10.2. Household portfolio composition......Page 261
Figure 10.1. Median wealth-holdings by age of the household head......Page 262
Country ranking by levels of net worth and wealth inequality......Page 263
Figure 10.2. LWS country rankings by mean and median of net worth and income......Page 264
Joint patterns of income and wealth inequality......Page 265
Table 10.4. Proportion with positive net worth and mean wealth and debt holdings, all people and income poor......Page 266
Descriptive evidence on the joint distribution of net worth and disposable income......Page 267
Table 10.6. Gini coefficient of household net worth, all persons and income poor......Page 268
Figure 10.3. Income-wealth quartile groups......Page 269
Determinants of household disposable income and net worth......Page 270
Conclusion......Page 271
Notes......Page 272
References......Page 273
Annex 10.A1. Features of the Luxembourg Wealth Study......Page 276
Table 10.A1.1. LWS household wealth surveys......Page 277
Table 10.A1.2. Wealth classification matrix in the LWS......Page 278
Table 10.A1.4. Per capita household wealth in the LWS database and national balance sheets......Page 279
Table 10.A1.5. Demographic structure based on LWS data......Page 280
Part V. Conclusions......Page 281
Chapter 11. Inequality in the Distribution of Economic Resources: How it has Changed and what Governments Can Do about it......Page 283
Levels of income inequality and poverty among the entire population......Page 284
Box 11.1. Why do people care about income inequalities?......Page 285
Perceptions about poverty in EU countries, mid-2000s......Page 286
Changes in income inequality and poverty among the entire population......Page 287
Table 11.1. Summary of changes in income inequality and poverty......Page 288
Shifts in income distribution and poverty among various groups......Page 289
Demographic factors......Page 290
Labour-market trends......Page 291
Table 11.3. Summary of changes in earnings inequality among men working full time......Page 292
Government redistribution......Page 293
Summing-up......Page 294
Table 11.6. Summary of various factors for changes in poverty rates for households with a head of working age or of retirement age......Page 295
Non-cash income sources......Page 296
Figure 11.2. Influence of in-kind public services and consumption taxes on income inequalities......Page 297
Figure 11.3. Static and dynamic measures of poverty and inequality......Page 298
Non-income measures......Page 299
Dynamic measures......Page 301
What are the implications of these findings for policies aimed at narrowing poverty and inequalities?......Page 303
The redistribution strategy......Page 304
The work strategy......Page 305
What works best in reducing poverty?......Page 306
Figure 11.4. Poverty reductions achieved through “redistribution” and “work” strategies, mid-2000s......Page 307
Conclusion......Page 308
References......Page 309