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

Author

Listed:
  • Stefan Thewissen

    (Organisation for Economic Co-operation and Development (OECD), Paris)

  • Lane Kenworthy

    (Department of Sociology, University of California-San Diego)

  • Brian Nolan

    (Institute for New Economic Thinking, Department of Social Policy and Social Intervention, and Nuffield College, University of Oxford)

  • Max Roser

    (Nuffield College and Oxford Martin School, University of Oxford)

  • Tim Smeeding

    (LaFollette School of Public Affairs, University of Wisconsin-Madison)

Abstract

Income inequality has increased in a number of the rich democratic nations over the past generation. We examine whether this has reduced income growth for middleincome households. Using LIS, OECD and WID data, we show how median household incomes and income inequality have evolved between 1980 and 2013, and we analyse whether these trends are related. Growth in median incomes is negatively associated with changes in the Gini but not with changes in top income shares. Economic growth is strongly associated with growth in median incomes, although it does not seem to fully transmit.

Suggested Citation

  • Stefan Thewissen & Lane Kenworthy & Brian Nolan & Max Roser & Tim Smeeding, 2018. "Rising Income Inequality and Living Standards in OECD Countries: How Does the Middle Fare?," Journal of Income Distribution, Ad libros publications inc., vol. 26(2), pages 1-23, July.
    • Handle: RePEc:jid:journl:y:2018:v:26:i:2:p:1-23
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    Cited by:

    1. Ceriani, Lidia & Hlasny, Vladimir & Verme, Paolo, 2021. "Bottom Incomes and the Measurement of Poverty: A Brief Assessment of the Literature," GLO Discussion Paper Series 914, Global Labor Organization (GLO).
    2. 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.
    3. Vlandas, Tim & Weisstanner, David, 2022. "Income Stagnation and the Politics of Welfare State Retrenchment in Advanced Economies," SocArXiv 862ua, Center for Open Science.
    4. 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.
    5. 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.
    6. 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.
    7. 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).
    8. 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).
    9. 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.
    10. Nolan, Brian & Thewissen, Stefan & Roser, Max, 2016. "GDP per capita versus median household income: What gives rise to divergence over time?," INET Oxford Working Papers 2016-03, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    11. 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.
    12. 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.
    13. 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, August.
    14. 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.

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    Keywords

    Living standards; inequality; median; inclusive growth;
    All these keywords.

    JEL classification:

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

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