Wealth and Income Inequality in Europe
While it has long been apparent that global levels of wealth and income inequality have been steadily increasing since the 1970s, the issue received scant attention in Europe until the recent financial crisis and the resulting Great Recession illuminated for the general public just how great the chasm between the very rich and everybody else had grown. This realisation was coupled with an increased focus on inequality among economists and other academics, leading to a fresh drive for policy ideas to remedy the alarming trend. This Forum comprises a diverse range of viewpoints on the recent history and dynamics of inequality within Europe, each striving to define the root causes in the various countries being examined.
50 Years of Intereconomics
Turkey and the EU: Issues and Challenges
Our anniversary website contains many interesting articles from the Intereconomics archives, including this Forum from 2004 on the challenges to Turkey joining the EU. While some expect major economic and geopolitical benefits from Turkish EU membership, others fear that it would change the nature of the European project and destroy its original rationale. Twelve years later, as the issue returns to the agenda, many of the same arguments apply.
Turkey and the EU
Figure of the Month
Share of labour income in selected countries, 1991-2013
This figure from Maurizio Franzini and Mario Pianta’s Forum article “The Engines of Inequality” shows the share of national income going to labour in six G20 countries between 1991 and 2013. For more information, please click on the figure.
The Erosion of the German Middle Class
Since the mid-1990s, income inequality has increased more sharply in Germany than in many other European countries, as the economic basis of middle-class prosperity and security has crumbled. Gerhard Bosch and Thomas Kalina argue that the new minimum wage, an increase in coverage by collective agreements, the re-regulation of atypical employment forms and the elimination of incentives to take marginal, part-time jobs are the keys to strengthening the middle-income groups in Germany.
Economics of a Brexit
Michael Emerson argues that it is time to clarify the consequences of the UK’s seemingly simple choice: in or out. In case of a vote for secession, the EU could be expected to play a tough game in negotiations and would be in no hurry to end the uncertainty. EU member states would be tempted by the opportunity to gain advantages in commercial competition over the UK’s current economic strengths. Furthermore, the UK would face years of strategic uncertainty as the negotiations dragged on.
Quote of the Month
Economics of a Brexit
"Secessionists tend to argue that since the EU has a trade surplus with the UK, it would be keen to conclude a friendly free-trade deal. This is an illusion that fails to understand the likely EU response."
– from Michael Emerson's Editorial Economics of a Brexit
Wealth Inequality and the Great Recession
The study of wealth and wealth inequality has received far less attention than income, but the increasing importance of wealth, debt and wealth inequality means closer attention must be paid to their concomitant dynamics. Francesco Bogliacino and Virginia Maestri demonstrate that policy interventions to reduce economic inequality continue to target income more than wealth, but targeting the latter – especially through taxes on financial assets – is arguably more effective.
Wealthification in the United States and Europe
The “wealthification” of politics is an important contributor to governance problems, weak accountability and unsatisfactory economic performance in many democratic countries. Darrell M. West (Brookings Institution) details how billionaires are pouring extensive resources into supporting their favored candidates and causes or running for office themselves, raising important questions about excessive influence, especially against a backdrop of poor transparency, weak news coverage and performance challenges in political systems around the world.