A concern of much contemporary analysis of inequality has been with shifts over time. Again, there is a need to be aware of a combination of changes between nations as well as within them. As far as the between nation relationship is concerned, the large gap that characterizes much of the world today is a product of a divergence that began as the industrialization process ‘took off’ in Europe and other nations in the global North. This increasing divergence continued until near the end of the twentieth century (Bourguignon and Morrisson, 2002). At that point a sharp reversal became evident both in the data on the Gini coefficient and on poverty rates, but this was a product of population growth in several key countries, not a reduction in the total numbers of those in poverty (Bourguignon, 2015, pp. 26–8). Much of this change was a product of exceptional economic growth in East Asia.
A different perspective is possible on contemporary events if changes that have occurred within the industrialized nations in the twentieth and twenty-first centuries are considered. Here, two phenomena have been highlighted. One is the strong impact of the two world wars, and their immediate aftermaths, when equalization processes occurred both with respect to the distribution of gross incomes and in the impact of taxes and benefits to further that effect upon net incomes. This trend was reversed from the early 1980s (see Piketty, 2014, for a general analysis, particularly featuring developments in France, the US and the UK). For contemporary advanced economies, Atkinson (2015, pp. 66–7) specifically notes ‘the role played by the welfare state in reducing income inequality and preventing any rise in market income inequality from feeding into inequality in disposable income’ in the period after the Second World War, and the weakening of that effect after the end of the 1980s (see also Förster and Tóth, 2015).
A pertinent OECD study of differences in levels of inequality across its member nations in the 2000s indicated that tax and benefit systems have become less distributive, but noted that net incomes are distributed less unequally than market incomes. The report (OECD, 2011a, p. 36) suggested that:
Public cash transfers, as well as income taxes and social security contributions, played a major role in all OECD countries in reducing market-income inequality. Together, they were estimated to reduce inequality among the working-age population (measured by the Gini coefficient) by an average of about one-quarter across OECD countries. This redistributive effect was larger in the Nordic countries, Belgium and Germany, but well below average in Chile, Iceland, Korea, Switzerland and the United States.
This is particularly important in the context of another key point also accepted by the OECD, that when the lowest income deciles fail to gain any benefit from economic growth, ‘the social fabric frays and trust in institutions is weakened’ (2015, p. 21). At the broadest level, research on widening inequality leads to general agreement that not only does it reduce economic growth, measured for example by GDP, but that it also presents serious social and political challenges that are societally unsustainable.
In national studies of inequality, attention is often given to the interplay between economic inequality and inequalities of gender and ethnicity (as well as other social divisions such as age and sexuality, for example). In the case of ethnicity a key generalization is drawn from the massive gap that opened up between the early industrializing nations and the rest of the world, noting that the gainers were European countries plus a number of nations with strong connections to Europe – the US and those countries of the British Empire where large-scale colonization from the UK took place. The impact of imperialism on structuring contemporary divisions of ethnicity is an important factor in explaining the significant and sustained economic disadvantage of the countries excluded from this process in the eighteenth and nineteenth centuries. Echoes are also present in the emergence and operation of institutional racism experienced by minority ethnic populations in advanced economies such as the UK (EHRC, 2016), as well as in the policy discourse on migration which is driven by economic rather than humanitarian concerns (see Chapter 6).
In the case of gender, the fundamental fact is marked inequalities between men and women across the world in all dimensions of life, including income and wealth. Since the groundbreaking Fourth UN Conference on Women held in Beijing in 1995 (United Nations, 1995), discussion of women’s poverty has wrestled with methodological problems about measuring income and wealth and the disaggregation of more widely available household data to account for gender distributions within households. UN Women, the UN agency established to promote gender equality, highlights more revealing inequalities in access to economic resources that ‘keep women poor’. This includes less access to credit than men, restricted rights to hold land and more limited rights to social protection. This last form of inequality has been the subject of important social security and workplace reforms since the 1970s in advanced economies, but globally, although over the half of the world’s women are in waged employment, the gender gap in employment participation has hardly changed since 1995. Women continue to be more likely to be unemployed, more likely to be in vulnerable employment and consequently are overrepresented among those who lack pension and other social protection entitlements (ILO, 2016). Progress in reducing economic gender inequality has, in fact, stalled since the 2008 financial crisis (World Economic Forum, 2018), and in the intersection with race and ethnicity divisions have also been deepened through austerity measures (Bassel and Emejulu, 2018). There are, in addition, other dimensions of inequality that are often blurred or omitted in public debate, such as the notion of inequality of opportunity and inequalities between generations, but which are also central to policy outcomes. The next section will consider these issues sequentially, while acknowledging connections between them and the broader agenda about inequality.
Persistence and change in inequality
As far as inequality of opportunity is concerned, the fundamental question of whether and to what extent some degree of inequality is acceptable and/or justifiable is of more than philosophical interest in the social policy context. Inasmuch as there is widespread acceptance of the case against extreme inequality, this is often supplemented by a concern about inequality of opportunity. The position that tends to capture general agreement is that while some inequality of outcome as a consequence of differences in individual endeavour is tolerable, it is desirable that individuals start life equal. Nevertheless, even were this to be a generally agreed principle, there is substantial evidence that this ideal is not realized in practice. Piketty’s (2014) examination of the distribution of capital explores the importance of its transmission between generations. Studies in the US and the UK have provided extensive evidence that individual life chances are affected by parental wealth. A particular UK contribution to this has been cohort studies following people from birth (Pearson, 2015). It has been shown that upward social mobility is heavily dependent upon increases in job opportunities (Goldthorpe, 2013), although even where occupational mobility is possible