Policy Research Working Paper 10880, authored by Roy Van der Weide and Michael Woolcock, critically evaluates the advancements in measuring income and wealth inequality and mobility in high-income countries through the lens of a comprehensive volume titled "Measuring Distribution and Mobility of Income and Wealth." This paper highlights that across most high-income countries, both income and wealth inequality have been on the rise, while intergenerational mobility has shown a decline.
Key takeaways from the reviewed volume include:
Rising Inequality and Declining Mobility: The research underscores that income and wealth inequality is increasing, and intergenerational mobility is decreasing in high-income countries, a phenomenon that prompts questions about the sustainability of current economic trends and the potential need for policy adjustments.
Global vs. Local Dynamics: The paper raises questions about how inequality and mobility trajectories differ between countries at varying stages of economic development. It explores whether certain subgroups within societies remain perpetually at the bottom of the income distribution, suggesting potential structural barriers to upward mobility.
Policy Relevance: The authors inquire about effective policy measures that can address inequality and enhance mobility, considering both their efficacy and political feasibility. This reflects a pragmatic approach to identifying practical solutions that could be implemented in real-world scenarios.
Broader Considerations Missing: The paper notes that while the focus on measurement has been crucial, it has left room for broader considerations regarding the reasons behind rising inequality and falling mobility. It argues that future research should delve deeper into the causes, consequences, and the economic rationale for caring about these issues.
Moral and Economic Justifications: The paper acknowledges that moral reasons for concern about inequality and mobility exist, including reducing societal barriers to opportunity, improving individual happiness, and upholding ethical standards. It also posits that there are economic reasons to care, such as the potential for reduced human capital utilization, which impacts economic growth and social welfare.
In summary, the paper serves as a critical reflection on the state of research in inequality and mobility, highlighting both significant findings and areas where further exploration is needed. It emphasizes the importance of considering both the moral and economic dimensions of these issues, particularly in light of growing global concern over widening disparities and declining mobility.