Tipping back the balance

Did you know that, even before the current recession and despite the economic boom of recent years, the gap between rich and poor and the number of people below the poverty line have grown over the past two decades?

Growing Unequal? explains the reasons why. One reason is the rise in rich incomes relative to low and middleincome people. Also, though income inequality increased sharply in the early 2000s in Canada, Germany, Norway and the US, incomes became more equal in Greece, Mexico and the UK. Growing Unequal? brings together a range of analyses on the distribution of economic resources in OECD countries. The evidence on income distribution and poverty covers, for the first time, all 30 OECD countries in the mid-2000s, while information on trends extending back to the mid-1980s is provided for around two thirds of the countries.

Older people are much less likely to be poor than they were in the past, the report finds, while poverty has shifted to young adults and families with children. The report describes inequalities in a range of areas, such as household wealth, consumption patterns, and public services, which are typically excluded from conventional discussion about the distribution of economic resources among individuals and households. Precisely how much inequality there is in a society is not determined randomly, but as the report emphasises, it is not beyond the power of governments to change matters. And act they should, for as the report argues, inequality can fuel populist and protectionist sentiments, while for the economy, wide income inequality wastes human resources, particularly if a large portion of the population is either trapped in unemployment or in lowpaid, low-skilled jobs.

For more snapshots from Growing Unequal?, see www.oecd.org/els/social/inequality. See also www.oecd.org/bookshop

For more on inequality, read "Unequal growth, unequal recession", an article by AB Atkinson.

©OECD Observer No 270/271 December 2008-January 2009

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