“After Piketty”, 12 policy proposes to reduce inequality of outcomes

“The media storm surrounding the publication of Thomas Piketty’s remarkable Capital in the Twenty-First Century (2014) has ensured that inequality is now in the forefront of public debate. But what next?”

Sir Tony Atkinson

Thus begins an essay in The British Journal of Sociology by the dean of inequality studies, A. B. Atkinson of Oxford University. This is a must read for anyone interested in public policy addressed to the growing inequality in the rich countries.

Professor Atkinson’s focus is on the United Kingdom, but his far-reaching set of policy prescriptions address many aspects of public policy (not just tax and transfer policy), and have relevance well beyond the European context.

Tony Atkinson is an economist of the highest order who has been studying and contributing to the economics of inequality since the 1960s. In this paper he offers 12 proposals that, he says, “could bring about a genuine shift in the distribution of income towards less inequality.”

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The Economics of the Great Gatsby Curve

In an article on the Brookings Institution website that was originally posted by the National Review, Scott Winship questions the idea that greater inequality at a point in time is associated with less generational mobility over time — what the Chairman of the Council of Economic Advisors, Alan Krueger, called the “Great Gatsby Curve” in a speech given on January 12th.

Winship’s article does a disservice to a well-established literature on generational mobility by suggesting that the basic information Krueger used is in some sense invalid. Krueger’s Great Gatsby Curve is in fact well-rooted in the labour economics literature, and debate would be better placed addressing the policy implications he draws than to suggest that President Obama’s top economist feels compelled to create his own facts.

So in the spirit of moving evidence-based public policy forward here is a quick review of the underpinning of the Great Gatsby Curve in both theory and practice.

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Inequality and Occupy Wall Street 2: the facts are fertile soil

The Occupiers have their facts right.

There has been an unprecedented increase in earnings inequality in the United States, with significant shares of total earnings increasingly going to the very top.

Let’s be clear on this: we are not talking about inherited wealth, but rather “earnings”, the stuff we get from being an “employee”.

The only group to see their average earnings rise over the course of the last three decades or so are highly educated, older, men. And this is driven by the select few. It is not an exaggeration to say that it is the top 1%.

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