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Divided We Stand

Why Inequality Keeps Rising

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In the three decades to the recent economic downturn, wage gaps widened and household income inequality  as measured by GINI increased in a large majority of OECD countries. This occurred even when countries were going through a period of sustained economic and employment growth. This report analyses the major underlying forces behind these developments. It examines to which extent economic globalisation, skill-biased technological progress and institutional and regulatory reforms have had an impact on the distribution of earnings. The report further provides evidence of how changes in family formation and household structures have altered household earnings and income inequality. And it documents how tax and benefit systems have changed in the ways they redistribute household incomes. The report discusses which policies are most promising to counter increases in inequalities and how the policy mix can be adjusted when public budgets are under strain.

"Analyses rely on simple statistical techniques that are accessible to a large readership... the graphic and charts are of great help to gain a quick visual grasp of the various issues addressed."

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Inequality Between the Employed and the Non-employed

This chapter considers trends in the earnings distribution across the whole workingage population, i.e. workers and non-workers taken together. It examines and quantifies the respective impacts of two forces: changes in wage disparities among workers and changes in non-employment rates. The chapter relates such inequality dynamics to macroeconomic developments. It analyses the effects on employment of globalisation, evolving technologies, and institutional and policy changes, and combines the results of the analysis with findings on the determinants of wage inequality trends. The chapter then estimates the overall effect of each determinant on changes in earnings inequalities across the whole working-age population.

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