The New Economics of Rising Inequalities

The first in a new series of CEPR Conference Volumes published jointly with Oxford University Press, The Economics of Rising Inequalities is an in-depth discussion of rising inequalities in the western world. It explores the extent to which rising inequalities are the mechanical consequence of changes in economic fundamentals (such as changes in technological or demographic parameters), and to what extent they are the contingent consequences of country-specific and time-specific changes in institutions. It includes both theoretical and empirical contributions. Both the 'fundamentalist' view and the 'institutionalist' view have some relevance. For instance, the decline of traditional manufacturing employment since the 1970s has been associated in every developed country with a rise of labour-market inequality (the inequality of labour earnings within the working-age population has gone up in all countries), which lends support to the fundamentalist view. But, on the other hand, everybody agrees that institutional differences (minimum wage, collective bargaining, tax and transfer policy) between Continental European countries and Anglo-Saxon countries explain why disposable income inequality trajectories have been so different in those two groups if countries during the 1980s-90s, which lends support to the institutionalist view.