Back in August, I posted about inequality over the long run in New Zealand back to the 1930s, based on research by John Creedy, Norman Gemmell and Loc Nguyen. The trends were interesting in their data:
Inequality was relatively high (perhaps similar to inequality today) in the 1930s and up to the early 1950s, then fell from the 1950s to the early 1980s. Inequality then rapidly increased back to its prior levels during the reforms of the late 1980s and early 1990s, and then has been relatively flat ever since.
I've previously noted the difference in New Zealand's experience of inequality from that in other countries (and this is something I draw attention to in my ECONS102 class), especially the rapid rise in inequality in early 1990s, followed by a long period where inequality has barely changed (while inequality has increased in other OECD countries). So, I'm interested to see how the longer-run data for other countries compares as well. With that in mind, I recently read this 2015 working paper by Markus Schneider (University of Denver) and Daniele Tavani (Colorado State University), which presents the long-run trend for the U.S. Here's their Figure 2:
The dark solid line in the Gini coefficient overall. Notice that the trend is quite different from the New Zealand long-run trend in two ways. First, there is a fairly continuous decrease in inequality from the 1920s to the 1940s. In contrast, Creedy et al. showed the decrease in inequality in New Zealand didn't stop until the 1950s (although that might be explained by the data that they were using). Second, there is a continuous increase in inequality from the 1940s to 2012. In contrast, Creedy et al. showed the trend in inequality in New Zealand was flat from the 1950s to the 1980s, followed by a sudden increase in the early 1990s, and then a flat trend again since.
However, aside from the long-run trend, Schneider and Tavani decompose their measure of inequality (the Gini coefficient) into two components, representing: (1) inequality at the top of the income distribution (G1 in the figure above); and (2) inequality at the bottom of the income distribution (G0 in the figure above). Looking at those measures, they find that:
...inequality at the top of the income distribution was relatively stable from the end of WWII until 1981, but has been increasing ever since...
From the end of WWII until the late 70s, increasing inequality as measured by the Gini was driven by inequality at the bottom as the distance between low-and mid-level incomes grew.
So, the long-run increase in inequality in the U.S. is a 'tale of two Ginis'. The increase was driven by inequality at the bottom from the 1940s to the early 1980s, and then driven by increases in inequality at the top from the 1980s to 2012. It would be interesting to see a similar decomposition for New Zealand, and that might explain the lack of increase in inequality in New Zealand in recent times, as there has been little change in the share of income of the top one percent (unlike for many other countries). [*]
Read more:
No comments:
Post a Comment