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OECD Centre for
Opportunity and Equality
Evidence-based, policy-oriented research on inequalities
Four policy avenues to reduce income inequality in OECD countries
Brussels, 10th October 2016, DG RTD
Céline Thévenot
OECD, Directorate for Employment, Labour and Social Affairs
OECD/COPE
http://oe.cd/cope 2
Large country differences in inequality
Source: OECD Income Distribution Database (www.oecd.org/social/income-distribution-database.htm), Note: the Gini coefficient ranges from 0 (perfect equality) to 1 (perfect inequality). Income refers to cash disposable income adjusted for household size. Data refer to 2013 or latest year available.
OECD/COPE
http://oe.cd/cope 3
Rather than continuous long-term trends, “episodes” of inequality increases
Long-term trends in inequality of disposable income (Gini coefficient)
Source: OECD (2015), “In It Together”, http://www.oecd.org/social/in-it-together-why-less-inequality-benefits-all-9789264235120-en.htm OECD Income Distribution Database, www.oecd.org/social/income-distribution-database.htm. Note: Income refers to disposable income adjusted for household size.
OECD/COPE
http://oe.cd/cope 4
No light at the end of the tunnel
Economic recovery has not reduced inequality
-2,5%
-2,0%
-1,5%
-1,0%
-0,5%
0,0%
0,5%
1,0%
Bottom 10% Median income Top 10%
2007-2010 2010-2014 2007-2014
Average annual growth of disposable income, OECD-34
OECD/COPE
http://oe.cd/cope 5
2
3
1
4 policy avenues to tackle high inequality
Promote employment and good-quality jobs
Strengthen quality education and skills development
Foster women’s participation in economic life
4 Improve the design of tax and benefit systems for a more efficient redistribution
OECD/COPE
http://oe.cd/cope 6
Non-standard work contributed to job polarisation
Percentage change in employment shares by task category, Mid 1990s - latest year
Source: OECD (2015), “In It Together”, http://www.oecd.org/social/in-it-together-why-less-inequality-benefits-all-9789264235120-en.htm Note: Abstract occupations (ISCO88: 12-34); Routine (ISCO88: 41-42, 52, 71-74, 81-82 and 93); Non-routine manual (ISCO88: 51 83 and 91). The overall sample restricted to workers aged 15-64, excluding employers as well as students working part-time.
-25
-20
-15
-10
-5
0
5
10
15
20
25
Non-routine Routine Abstract
Standard Work Non-standard Work
OECD/COPE
http://oe.cd/cope 7
More women in the workforce lowers inequality
Impact of changes in households employment patterns on Gini coefficient (mid-1980s-mid2000s)
Source: Luxembourg Income Study (LIS) data
-0,008
-0,014
Change in Gini
- 0,050
- 0,040
- 0,030
- 0,020
- 0,010
0,000
0,010
0,020
0,030
0,040
0,050 Change in households withfemale in skilled job
Combined wage effects
Change in households with FT,FY female worker
Change in households withfemale worker
Inequality would have been higher if women’s employment had remained the same as 20 years ago
OECD/COPE
http://oe.cd/cope 8 Note: Low PEB: neither parent has attained upper secondary education; Medium PEB: at least one parent has attained secondary and post-secondary, non-tertiary education; High PEB: at least one parent has attained tertiary education. The bars indicate 95% confidence intervals.
Average years of schooling by parental educational background (PEB) and inequality
11
12
13
14
20 25 30 35
Year
s o
f sc
ho
olin
g
Inequality (Gini coefficient)
Low PEB Medium PEB High PEB
Source: OECD (2015), “In It Together”
Inequality hinders lowers social mobility
OECD/COPE
http://oe.cd/cope 9
Inequality of market and disposable income, working-age population
Redistribution lowers inequality
0,20
0,25
0,30
0,35
0,40
0,45
0,50
0,55
Combined impact of cash transfers and taxes Impact of taxesImpact of cash transfers Gini at disposable income, after transfers and taxes (↗) Gini at market income, before transfers and taxes
OECD/COPE
http://oe.cd/cope 10
Redistribution has weakened recently
Inequality before and after redistribution though transfers and taxes, respectively, 2007=100, working-age population, OECD average
96
98
100
102
104
106
108
2007 2008 2009 2010 2011 2012 2013
Market income inequality(before transfers and taxes)
Gross income inequality (aftertransfers and before taxes)
Disposable income inequality(after transfers and taxes)
OECD/COPE
http://oe.cd/cope 11
2
3
1
Designing policy packages to tackle high inequality and promote social cohesion
Promote employment and good-quality jobs
Strengthen quality education and skills development
Foster women’s participation in economic life
4 Improve the design of tax and benefit systems for a more efficient redistribution
OECD/COPE
http://oe.cd/cope 12
What’s next?
Middle class
Intergenerational
mobility
Intragenerationnal
income mobility
How to prevent the middle
class from sliding?
Education, health, occupation,
relative poverty, wealth.
Does the passage of time
smooth income inequality?
OECD/COPE
http://oe.cd/cope 13
Thank you for your attention!
www.oecd.org/social/inequality-and-poverty.htm
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