The Orga­ni­za­tion for Eco­nomic Co-Operation and Devel­op­ment has released a new sur­vey of income inequal­ity in the devel­oped world. The OCED report says that again income inequal­ity has grown even dur­ing the global recession.

From the OCED press release is a sum­mary of the key find­ings of the report. You can down­load this media fact sheet which also pro­vides a good sum­mary to the report.

Why is the gap between rich and poor growing?

In most coun­tries the gap is grow­ing because rich house­holds have done sig­nif­i­cantly bet­ter than middle-class and poor house­holds. Changes in the struc­ture of the pop­u­la­tion and in the labour mar­ket over the past 20 years have con­tributed greatly to this rise in inequality.

* Wages have been improv­ing for those peo­ple who were already well paid.
* Employ­ment rates have been drop­ping among less-educated peo­ple.
* And, there are more single-adult and single-family households.

Who is most affected?
Sta­tis­ti­cians and econ­o­mists assess poverty in rela­tion to aver­age incomes. Typ­i­cally, they take the poverty line to be equiv­a­lent to one-half of the median income in a given country.

* Since 1980, poverty among the elderly has fallen in OECD coun­tries.
* By con­trast, poverty among young adults and fam­i­lies with chil­dren has increased.
* On aver­age, one child out of every eight liv­ing in an OECD coun­try in 2005 was liv­ing in poverty.

What does this mean for future gen­er­a­tions?
Social mobil­ity is gen­er­ally higher in coun­tries where income inequal­i­ties are rel­a­tively low. In coun­tries with high income inequal­i­ties, by con­trast, mobil­ity tends to be lower.

* Chil­dren liv­ing in coun­tries where there is large gap between rich and poor are less likely to improve on the edu­ca­tion and income attain­ments of their par­ents than chil­dren liv­ing in coun­tries with low income inequal­ity.
* Coun­tries like Den­mark and Aus­tralia have higher social mobil­ity, while the United States, United King­dom and Italy have lower mobility.

What can be done?
In some cases, gov­ern­ment poli­cies of tax­a­tion and redis­tri­b­u­tion of income have helped to coun­ter­act widen­ing inequal­i­ties, but this can­not be their only response. Gov­ern­ments must also improve their poli­cies in other areas.

* Edu­ca­tion poli­cies should aim to equip peo­ple with the skills they need in today’s labour mar­ket.
* Active employ­ment poli­cies are needed to help unem­ployed peo­ple find work.
* Access to paid employ­ment is key to reduc­ing the risk of poverty, but get­ting a job does not nec­es­sar­ily mean you are in the clear. Grow­ing Unequal? found that over half of all house­holds in poverty have at least some income from work.
* Welfare-in-work poli­cies can help hard-pressed work­ing fam­i­lies to have a decent stan­dard of liv­ing by sup­ple­ment­ing their incomes.

Like

Unlike