Growing Unequal_ - OECD

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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