Jaumotte, Florence, Osorio Buitron, Carolina, (2015), “Inequality and Labor Market Institutions”, IMF Staff Discussion Note, SDN /15/14, July
The rise of inequality in advanced economies, and in particular the growing concentration of incomes at the top of the distribution, has become a greater focus of attention for economists and policymakers. Understanding the factors behind this phenomenon is essential to determine whether policy action is needed to reduce income inequality, taking into account other policy objectives. Traditional explanations advanced for the rise in inequality have been technological progress and globalization. But there is little policymakers are able or willing to do to reverse these trends, because they benefit growth. Moreover, while high-income countries have been similarly affected by technological change and globalization, inequality in these economies has risen at different speeds. This has led economists to underscore the role of institutional changes, notably of financial deregulation and lower top marginal personal income tax rates.
Relevant Posts
- Muro, D. & Vidal, G. (2014) “Mind the Gaps: The Political Consequences of the Great Recession in Europe“, Eurocrisis in the Press, LSE EUROPP, 10 June.
- Roubini, N. (2014) “The Great Backlash“, Project Syndicate, 31 May.