Association for Public Policy Analysis & Management

This contribution to the panel draws on recent research in the Employment, Equity and Growth programme being carried out at the Institute for New Economic Thinking at the University of Oxford. Employing data from the Luxembourg Income Study, the OECD’s Income Distribution Database, and the World Top Income Database, it first brings out the extent of variation across OECD countries in the scale of increase in inequality and where that has been concentrated in the distribution. It then focuses on the growth in real incomes at and below the middle seen over the same period, which can also be assessed on the basis of LIS and OECD comparative data. This brings out how growth in real median incomes has varied very widely indeed across the OECD, and probes the relationship, if any, between trends in those real incomes (as a core indicator of living standards) and inequality. It also asks whether different ‘varieties of capitalism’ or welfare state regimes can be seen as more effectively underpinning improved living standards for ordinary families, and how this relates to their relative success in promoting overall economic growth, limiting the increase in inequality, or both. Other aspects of the policy implications of the findings relate to the role of redistribution, of effectively supporting labour force participation, and of wage-setting and regulation including the minimum wage. The findings also have important messages for monitoring progress in achieving inclusive growth, how aggregates and averages drawn from the national accounts need to be complemented by survey/register-based indicators to do so, and the role of inequality measures in that context.