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Rising Income Inequality and Living Standards in OECD Countries: How Does the Middle Fare?

Author

Listed:
  • Stefan Thewissen
  • Lane Kenworthy
  • Brian Nolan
  • Max Roser
  • Timothy Smeeding
Abstract
This paper uses data from the key comparative sources available for the rich countries to examine how both real median incomes and income inequality have evolved from around 1980 through the Great Recession. There are striking differences across OECD countries in average real median income growth. Some increase in overall inequality has been common, but with wide variation in extent and timing. Top (pretax) income shares have generally been rising, but not always consistently with overall inequality from household surveys. A significant negative association between changes in Gini and median income is found across countries over time, and a significant negative relationship with changes in top shares only when controlling for economic growth. Economic growth and inequality trends together leave much of the variation in median incomes unaccounted for, so direct measures of how these incomes are evolving need to be central to monitoring progress towards inclusive growth.

Suggested Citation

  • Stefan Thewissen & Lane Kenworthy & Brian Nolan & Max Roser & Timothy Smeeding, 2015. "Rising Income Inequality and Living Standards in OECD Countries: How Does the Middle Fare?," LIS Working papers 656, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:656
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    References listed on IDEAS

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    Cited by:

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    2. Karagiannaki, Eleni, 2017. "The empirical relationship between income poverty and income inequality in rich and middle income countries," LSE Research Online Documents on Economics 86917, London School of Economics and Political Science, LSE Library.
    3. Bartak, Jakub & Jabłoński, Łukasz & Tomkiewicz, Jacek, 2022. "Does income inequality explain public debt change in OECD countries?," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 211-224.
    4. Barra Roantree & Michelle Barrett, 2024. "Income inequality in Ireland, 1987–2019," Fiscal Studies, John Wiley & Sons, vol. 45(2), pages 143-153, June.
    5. Brian Nolan & Max Roser & Stefan Thewissen, 2016. "GDP Per Capita Versus Median Household Income: What Gives Rise to Divergence Over Time?," LIS Working papers 672, LIS Cross-National Data Center in Luxembourg.
    6. Roantree, Barra & Doorley, Karina, 2023. "Poverty, income inequality and living standards in Ireland: Third annual report," Research Series, Economic and Social Research Institute (ESRI), number JR4.
    7. Alberto Batinti & Joan Costa‐Font, 2020. "Do economic recessions “squeeze the middle class”?," Economics and Politics, Wiley Blackwell, vol. 32(3), pages 335-355, November.
    8. Malte Luebker, 2019. "Can the Structure of Inequality Explain Fiscal Redistribution? Revisiting the Social Affinity Hypothesis," LIS Working papers 762, LIS Cross-National Data Center in Luxembourg.
    9. P. P. Braga, Daniel & Pokorny, Benno & Porro, Roberto & Vidal, Edson, 2023. "Good life in the Amazon? A critical reflection on the standard of living of cocoa and cattle-based smallholders in Pará, Brazil," World Development Perspectives, Elsevier, vol. 31(C).
    10. Bjorn Gustafsson & Sai Ding, 2017. "Unequal Growth: Unequal Growth: How Household Incomes and Poverty in Urban China Have Developed since 1988, with an Emphasis on the Period from 2007 to 2013," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 201718, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    11. Brian Nolan & Max Roser & Stefan Thewissen, 2016. "Models, Regimes, And The Evolution Of Middle Incomes In OECD Countries," LIS Working papers 660, LIS Cross-National Data Center in Luxembourg.
    12. Chiara Assunta Ricci, 2016. "Perceived Social Position and Income Inequality: Do They Move Together? Evidence from Europe and the United States," LIS Working papers 667, LIS Cross-National Data Center in Luxembourg.
    13. Eleni Karagiannaki, 2017. "The empirical relationship between income poverty and income inequality in rich and middle income countries," CASE Papers /206, Centre for Analysis of Social Exclusion, LSE.
    14. Vlandas, Tim & Weisstanner, David, 2022. "Income Stagnation and the Politics of Welfare State Retrenchment in Advanced Economies," SocArXiv 862ua, Center for Open Science.
    15. Adam Goldstein & Ziyao Tian, 2020. "Financialization and Income Generation in the 21st Century: Rise of the Petit Rentier Class?," LIS Working papers 801, LIS Cross-National Data Center in Luxembourg.

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    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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