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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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Trends in Top Incomes and Their Tax Policy Implications

This chapter uses data derived from tax returns to analyse trends in the share of pre-tax personal income going to top income recipients. It begins with a discussion of its data sources, explaining why it has taken tax returns rather than household survey data. It then sets out the statistics behind the trends in top incomes during the three decades to 2008. In the following section it seeks to explain the top income trends, before considering their implications for tax policy. The last section concludes..

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