In It Together: Why Less Inequality Benefits All

image of In It Together: Why Less Inequality Benefits All

The gap between rich and poor keeps widening. Growth, if any, has disproportionally benefited higher income groups while lower income households have been left behind. This long-run increase in income inequality not only raises social and political concerns, but also economic ones. It tends to drag down GDP growth, due to the rising distance of the lower 40% from the rest of society. Lower income people have been prevented from realising their human capital potential, which is bad for the economy as a whole. This book highlights the key areas where inequalities are created and where new policies are required, including: the consequences of current consolidation policies; structural labour market changes with rising non-standard work and job polarization; persisting gender gaps; the challenge of high wealth concentration, and the role for redistribution policies.

English Also available in: French

Non-standard work, job polarisation and inequality

This chapter provides evidence for the implication of trends in non-standard work for individual and household earnings and income inequality. It first presents the sociodemographic characteristics of non-standard workers before discussing the contribution of non-standard work to overall changes in employment. It shows that, in a majority of OECD countries, standard jobs have disappeared in the middle of the distribution in terms of wages and skill, while non-standard jobs have contributed to an increase in jobs at both ends of the distribution. Non-standard jobs tend to pay lower wages than standard jobs, especially at the bottom of the earnings distribution, thereby raising earnings inequality. The chapter then looks at the impact of non-standard work on household incomes and shows that non-standard workers living alone or with other nonstandard workers suffer from higher chances of low income and poverty. Finally, the chapter examines the work incentives and adequacy effects of tax and benefit rules. It finds that some non-standard workers, such as the self-employed, usually face different statutory rules and shows that taxes and benefits reduce poverty gaps for non-standard workers but create work disincentives for moving from inactivity to work.

English Also available in: French



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