Maxime Ladaique

Growth, Inequality and Social Protection

Economic growth is, ultimately, the result of the myriad of transactions which take place in a market economy. Similarly, the distribution of income depends on who has ownership of factors of production, how much they can sell them for, and whether the resultant income is redistributed or not. It would be surprising were economic growth and income distribution not to be linked. But how exactly they might be linked has been the topic of many competing theories and empirical evaluations. Unfortunately, the studies have not led to a convergence on a common view that there is, or is not, a trade-off between the two goals of an equitable society and a rich one. This lack of enlightenment becomes less surprising once the empirical studies are examined in detail. Many empirical studies have looked at the final distribution of income, when some of the theories make stronger predictions about the links between growth and the distribution of income before taxes and transfers; similar ...

How much do OECD countries spend on social protection and how redistributive are their tax/benefit systems?

The global economic crisis has reignited interest in social policy and public spending on different types of social benefits. Public social spending-to-GDP ratios are often used to consider the magnitude of welfare systems in international perspective, but such comparisons alone give an incomplete picture of social effort across countries. This article looks at these different factors, before briefly considering the redistributive nature of tax/benefit systems in different member countries of the Organisation for Economic Co-operation and Development (OECD). The article also considers trends in social spending and compares spending in the late 2000s with the early 1990s when the previous economic crisis played out. The article ends by illustrating the profound effect the recent global economic crisis had on social spending trends across OECD countries.

Drivers of Growing Income Inequalities in OECD and European Countries

The gap between rich and poor in Organisation for Economic Co-operation and Development (OECD) and European Union (EU) countries has reached its highest level over the past three decades. This chapter first presents some comparisons on income inequality trends between European and OECD countries (Sect. 3.2). We focus in the following section on the evolution of the situation in the past decades (Sect. 3.3). During this period, income distributions have been profoundly transformed by the interplay of globalisation, technological change and regulatory reforms leading to profound structural changes in labour markets. In addition, taxes and benefits have tended to redistribute less from the mid-1990s up to the crisis. These factors, along with a number of demographic and social trends, are key to understanding the rise in income inequality in the OECD area and EU countries. Following the approach of identifying policies which are effective in tackling inequality, the OECD proposes a strategy based upon four pillars: women’s participation, employment, skills and education, and redistribution (Sect. 3.4).