The role of cultural attributes in inequality. ACES Working Paper No. 1, 2008

This paper used cross country data in order to identify the variables that determine the inequality and poverty within countries. The main result is that culture differences have a significant role in the explanation of inequality and poverty differences between countries. Other interesting results are that globalization above a certain level contributes to inequality and poverty, and that inequality and poverty have an inverse U relation in relation to literacy.

Inequality in the Southern Mediterranean: A survey of selected countries. MEDPRO Technical Report No. 23/December 2012

This paper addresses the issues of current levels of inequality: their trends, determinants and future scenarios, demonstrating that welfare levels are measured by per capita consumption. Location, educational attainment and employment status have been identified as the key factors affecting levels of welfare and its distribution. A benefit incidence analysis was performed to investigate benefits of different deciles of per capita expenditure from education and health services. The inequality patterns in countries under investigation present significant variations; countries such as Turkey, Morocco and Tunisia show relatively high inequality while others, such as Egypt or Syria, show moderate to low inequality. Inequality in human development was addressed using the inequality-adjusted human development index (IHDI), introduced by Global HDR 2010. The average loss in the HDI due to inequality in all Arab countries under investigation is about 20%. Two reference scenarios (optimistic and pessimistic) were used to project future paths up to 2020 and 2030. The impact of positive growth is increasing inequality and a shrinking middle class. Results show that the rich benefit most from this growth path. The opposite trend is observed for the pessimistic scenario.

The Effects of Ultra-Loose Monetary Policies on Inequality. Bruegel Policy Contribution Issue 2015/09, June 2015

Highlights • Low interest rates, asset purchases and other accommodative monetary policy measures tend to increase asset prices and thereby benefit the wealthier segments of society, at least in the short-term, given that asset holdings are mainly concentrated among richest households. • Such policies also support employment, economic activity, incomes and inflation, which can benefit the poor and middle-class, which have incomes more dependent on employment and which tend to spend a large share of their income on debt service. • Monetary policy should focus on its mandate, while fiscal and social policies should address widening inequalities by revising the national social redistribution systems for improved efficiency, intergenerational equity and fair burden sharing between the wealthy and poor.

Will income inequality cause a middle-income trap in Asia? Bruegel Working Paper 2013/06, 10 October 2013

The Asian economy is expected to realise favourable growth during the first half of this century, but there is no guarantee. There is a discussion about a ‘middle-income trap’, which refers to a country that has realised rapid growth to become a middle-income country but is unable to grow further. A middle-income trap could occur not only if there is a delay in shifting the economy toward a productivity-driven structure, but also if there is a worsening of income distribution.We consider this in line with the theories of development economics and through a quantitative analysis. The relationship between income inequality and the trap can be explained by the Kuznets hypothesis and the basic-needs approach. Our quantitative analysis supports the Kuznets hypothesis, and indicates that,although a low-income country can accelerate its economic growth with the worsening of income distribution as an engine, a middle income country would experience a decreasing growth rate if it fails to narrow the income gap between the top and bottom income groups. The results also show that the basic-needs approach is also applicable in practice, and imply that the improvement of access to secondary education is important. A sensitivity analysis for three Asian upper-middle-income countries(China, Malaysia and Thailand) also shows that the situation related to a middle-income trap is worse than average in China and Malaysia. These two countries, according to the result of the sensitivity analysis, should urgently improve access to secondary education and should implement income redistribution measures to develop high-tech industries, before their demographic dividends expire. Income redistribution includes the narrowing of rural urban income disparities, benefits to low-income individuals, direct income transfers, vouchers or free provision of education and health-care, and so on, but none of these are simple to implement.

Future of skills in Europe-Convergence or polarisation? CEPS Working Document No. 390, 27 February 2014

In this Working Paper, based on nearly 20 papers produced by the Centre for European Policy Studies, Slovak Governance Institute and the Conference Board Europe, we examine whether the current trends in the areas of education and skills are pushing the European Union, towards convergence or polarisation. We cover a wide range of questions related to this main issue. No easy answers, but several cross-cutting messages emerged from the research. We demonstrated that there is increasing complexity in what a ‘low-skilled’ person is and how well (or poorly) s/he fares in the labour market. There are undoubtedly powerful forces pushing for more polarisation, particularly in the labour market. Our research confirmed that early childhood education plays an important role, and it also appears to be increasingly uncontested as a policy prescription. However, the other frequently emphasised remedy to inequality – less selection in secondary education, particularly later division of children into separate tracks – is more problematic. Its effectiveness depends on the country in question and the target group, while education systems are extremely difficult to shift even on a long-term basis. A different, more-nuanced type of warning to policy-makers is delivered in our research on returns to higher education by field of study, which showed hidden rationality in how students choose their major.

The bear watches the dragon. The Russian debate on China. OSW Point of View Number 31, February 2013

Most participants in the Russian public debate seem to agree in their evaluation of the present condition of Russian-Chinese relations. There is awareness of increasing inequality between these two powers and Russia’s weakening position as compared to China.Those who share the optimistic view see co-operation with China as an opportunity for the Russian economy and a key element of Russia’s multi-directional foreign policy, an opportunity for Russia to avoid unilateral dependence on the West. The pessimists view the deepening co-operation with China through the prism of threats resulting from the increasing imbalance in bilateral relations. The greatest source of concern is the model of economic relations, which is often referred to as neo-colonial, where Russia’s role is reduced to that of a supplier of raw materials to China. The possible consequences are evaluated in different ways, ranging from the political subordination of Russian interests the Chinese ones to real loss of control over the Russian Far East. Those who share such views believe that Moscow should slow down its rapprochement with China and search for other partners in Eastern Asia, relations with whom could counterbalance the Chinese influence.

Family Types and the Persistence of Regional Disparities in Europe. Bruges European Economic Research (BEER) Papers 10/March 2007

This paper examines the association between one of the most basic institutional forms, the family, and a series of demographic, educational, social, and economic indicators across regions in Europe. Using Emmanuel Todd’s classification of medieval European family systems, we identify potential links between family types and regional disparities in household size, educational attainment, social capital, labour participation, sectoral structure, wealth, and inequality. The results indicate that medieval family structures seem to have influenced European regional disparities in virtually every indicator considered. That these links remain, despite the influence of the modern state and population migration, suggests that either such structures are extremely resilient or else they have in the past been internalised within other social and economic institutions as they developed.

The History and Challenges of Cohesion Policies. Jean Monnet/Robert Schuman Paper Series Vol. 14 No. 2, February 2014

From Introduction. Regional economic disequilibria was viewed as both an obstacle to and result of integration (European Commission 1965; European Commission 1962; European Commission 1969). Even within the Treaty of Rome, the Community tried to establish mechanisms to alleviate regional inequality. However, it was not until 1975 that the main mechanism of regional policy was established as a result of British and Irish enlargement: the European Regional Development Fund (ERDF). Since then, cohesion policy has become a significant EU expenditure accounting for €347bn, or 35.7% of the total EU budget for 2007-13(European Commission Regional Policy-Info Regio 2012). It has also become a key policy linked to enlargement. The underlying principle of cohesion policy assumes that the market alone cannot solve development problems and therefore government intervention is needed. This notion is in direct contrast to the underlying principle of EU competition policy, which asserts that the free market can solve economic development problems (Meadows, interview by author, 2003). The logic underlying cohesion policy is not only counter to EU competition policy, but also regulatory policies. Unlike other EU policies, cohesion policy is not a sectoral policy, but rather territorial in nature (Leonardi, 2006). Thus at times EU regulatory policy has also unintentionally worked counter to the goals of regional policy, sometimes disadvantaging poorer regions (Dudek, 2005). As the Community has sought to ameliorate regional disparities, it meant that all levels of government: local, regional, national and supranational would need to be involved, however, member states have different territorial governance and European regional development programs have to varying degrees impacted the relationship and policy responsibility of different levels of government (Leonardi, 2006; Bachtler and Michie 1993; Marks, 1993). The very nature of regional development policy has provoked a re-examination of subsidiarity, or which level of government is the lowest and most appropriate level. The discussion of policy formulation and implementation at the lowest level possible also addresses the issue of the democratic deficit. Some argue that the closer government is to the people the more responsive and representative it is. Democracy, however, also implies that public funds are used in a transparent way and for public rather than private good. Yet, as we examine the history and current situation of EU regional funds we find that corruption and misuse still abound. Thus, to understand the history of regional policy it is imperative to look at the major transformations of the policy, how regional policy has impacted subsidiarity and the quality of democracy, become an important instrument of enlargement and contradicted or conflicted with other EU policies.

Wage inequality in Germany – What role does global trade play? Policy Brief #2015/03

Wage inequality in Germany has increased significantly since the mid-1990s. The intensification of international trade relations is a frequently cited cause for this issue. However, an empirical study revealed that global trade can only directly explain around 15 percent of the increase in wage inequality in Germany. Primarily, the growing heterogeneity among companies in Germany plays a greater role – especially within industries. The decline in collective bargaining is the primary company-specific driver of wage inequality. Nevertheless, protectionist measures would not be effective for achieving greater wage equality.