OECD on Inequality
Following concern expressed by the IMF, the Conference Board and of course thousands of protesters around the world, the OECD has just released an extensive 400 page report on the problem of growing inequality: Divided We Stand: Why Inequality Keeps on Rising.
I haven’t read through it yet, and it also has quite a lot of other information for downloading and for interaction on-line, but here are some of the conclusions for Canada:
- inequality in Canada is above the OECD average, but still below levels in the US
- the rise in inequality is largely due to increased disparities in labor earnings, but also due to less redistribution
- taxes and benefits play a smaller role in reducing inequality in Canada than in most OECD countries: prior to the mid-1990s, they offset more than 70% of the rise in market income inequality, now it’s less than 40%
- the richest 1% saw their share of income rise from 8.1% in 1980 to 13.3% in 2007
It calls for a focus on
- more and better jobs,
- investing in human capital, starting at early childhood level and with more life-long learning
- reforming tax and benefit systems with an increase in the share paid by wealthier individuals
- providing free and high quality public services
The main report also notes that declining coverage of unions and collective bargaining, as well as more precarious work has also contributed to rising earnings inequality.
There are lots of graphs in the report and on-line.
Here’s one I created last week for another article I’ve written.
Thank you for the telling graph. It is only unions that can face global capital and force reversal of inequality trending. We do not yet know the names of the leaders of the new global union movement, but they will be from the low wage countires.
I discussed this report on yesterdayâ€™s Lang and Oâ€™Leary Exchange, starting 18 minutes and 18 seconds into the episode.
I noted a similar trend with graph Krugman blogged on UK 1% trend http://krugman.blogs.nytimes.com/2011/11/14/the-1-across-space-and-time/ being the inverse of UK trade union membership (chart 5) in http://www.parliament.uk/documents/commons/lib/research/briefings/snsg-05125.pdf
As it says on the OECD website
“The main driver behind rising income gaps has been greater inequality in wages and salaries, as the high-skilled have benefitted more from technological progress than the low-skilled.”
And they continue:
“Our report clearly indicates that upskilling of the workforce is by far the most powerful instrument to counter rising income inequality.”
So it’s understandable that skills training should be the key takeaway. However, strangely enough, it’s not getting reported that way.