1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Less Income Inequality and More Growth – Are They Compatible? Part 2. The Distribution of Labour Income

This paper explores the role of macroeconomic factors and structural policies in shaping the distribution of labour income. Technological change and globalisation play at least some role in driving inequality patterns, but structural policy can also have an important influence on inequality outcomes, in particular through education and labour market policies. Drawing on empirical analysis of the links between structural policies and the distribution of labour income, the paper looks at potential policy trade-offs and complementarities with respect to the two policy objectives of lowering income inequality and raising economic growth. It concludes that many policies yield a double dividend in the sense that they contribute to achieving both goals simultaneously. This relates in particular to policies that facilitate the accumulation of human capital, that make educational achievement less dependent on personal and social circumstances, that reduce labour market dualism and that promote the labour market integration of immigrants and women.

English

Keywords: labour market institutions, product market regulation, income inequality, globalisation, labour income, technological change, education
JEL: J58: Labor and Demographic Economics / Labor-Management Relations, Trade Unions, and Collective Bargaining / Labor-Management Relations, Trade Unions, and Collective Bargaining: Public Policy; I24: Health, Education, and Welfare / Education and Research Institutions / Education and Inequality; D31: Microeconomics / Distribution / Personal Income, Wealth, and Their Distributions; J71: Labor and Demographic Economics / Labor Discrimination / Labor Discrimination; O33: Economic Development, Innovation, Technological Change, and Growth / Innovation; Research and Development; Technological Change; Intellectual Property Rights / Technological Change: Choices and Consequences; Diffusion Processes; J31: Labor and Demographic Economics / Wages, Compensation, and Labor Costs / Wage Level and Structure; Wage Differentials; F16: International Economics / Trade / Trade and Labor Market Interactions; G18: Financial Economics / General Financial Markets / General Financial Markets: Government Policy and Regulation
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