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Changes in the profile of inequality across Europe since 2005: austerity and redistribution

Author

Listed:
  • Markus P.A. Schneider

    (University of Denver, Denver, CO, USA)

  • Stephen Kinsella

    (University of Limerick, Ireland)

  • Antoine Godin

    (Kingston University, London, UK)

Abstract

We present two Gini-like inequality indices that provide a more nuanced picture of how the profile of inequality has changed across European countries since 2005. We use these indices to analyse the distributional changes that can be attributed to the push for austerity. We estimate the JV-indices for 24 European countries over 9 years, and then use this panel to analyse the distributional effects of the fiscal consolidation policies Europe endured after the 2008 crisis. We find that austerity increased income inequality in eurozone countries, but reduced income inequality in countries that do not use the euro as their currency. We uncover a significant new relationship between austerity policies and the tails of the income distribution, further suggesting that in the eurozone these policies on average amount to a redistribution from the bottom to the top.

Suggested Citation

  • Markus P.A. Schneider & Stephen Kinsella & Antoine Godin, 2016. "Changes in the profile of inequality across Europe since 2005: austerity and redistribution," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 13(3), pages 354-374, December.
    • Handle: RePEc:elg:ejeepi:v:13:y:2016:i:3:p354-374
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    Citations

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    Cited by:

    1. Eckhard Hein & Petra Dünhaupt & Ayoze Alfageme & Marta Kulesza, 2017. "Financialisation and distribution in three main Eurozone countries from a Kaleckian perspective: the US, the UK and Sweden compared – before and after the crisis," Working Papers 9/17, Sapienza University of Rome, DISS.
    2. Eckhard Hein & Petra Dünhaupt & Ayoze Alfageme & Marta Kulesza, 2017. "Financialisation and distribution in three main Eurozone countries from a Kaleckian perspective: France, Germany and Spain compared – before and after the crisis," Working Papers 8/17, Sapienza University of Rome, DISS.
    3. Philipp Heimberger, 2020. "The dynamic effects of fiscal consolidation episodes on income inequality: evidence for 17 OECD countries over 1978–2013," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(1), pages 53-81, February.
    4. Hein, Eckhard & Dünhaupt, Petra & Alfageme, Ayoze & Kulesza, Marta, 2017. "Financialisation and distribution in the US, the UK, Spain, Germany, Sweden and France: Before and after the crisis," IPE Working Papers 85/2017, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    5. Philipp Heimberger, 2018. "The Dynamic Effects of Fiscal Consolidation Episodes on Income Inequality," wiiw Working Papers 147, The Vienna Institute for International Economic Studies, wiiw.
    6. Anastasia PANORI & Yannis PSYCHARIS, 2018. "The impact of the economic crisis on poverty and welfare in Athens," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 48, pages 23-40.
    7. Vanesa Jorda & Jose M. Alonso, 2020. "What works to mitigate and reduce relative (and absolute) inequality?: A systematic review," WIDER Working Paper Series wp-2020-152, World Institute for Development Economic Research (UNU-WIDER).
    8. Yaël Drunen & Bram Spruyt & Filip Droogenbroeck, 2021. "The Salience of Perceived Societal Conflict in Europe: A 27 Country Study on the Development of a Measure for Generalized Conflict Thinking," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 158(2), pages 595-635, December.

    More about this item

    Keywords

    austerity; Europe; inequality; income distribution; Gini; Lorenz curve;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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