The Future of Inequality in Europe

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The Future of Inequality in Europe | Conversations for the Future of Europe – 2020 #1

Lucas Chancel - Why is Europe More Equal Than the US? The Role of Predistribution and Redistribution. Drawing from novel distributional national accounts, we study inequality and redistribution in Europe and the US over the 1980-2017 period. We find a rise in inequality in almost all European countries since 1980. This increase was much more contained than in the US. While taxes and transfers ("redistribution") contributed to temper the rise of inequality in Europe, most of the gap in EU-US inequality differential can now be explained by differences in "predistribution" policies. We discuss proposals to generate new sources of revenue by implementing minimum corporate, income, wealth and carbon tax rates at the European level or among countries willing to do so.

Zsolt Darvas - The Policy Implications of the Rising EU-wide Income Inequality. Inequality analyses frequently focus on the country level. We derive the EU-wide income distribution and demonstrate that the inequality indicators published by Eurostat (calculated as weighted average of country-level data) do not correspond to the EU-wide distribution. We decompose inequality changes to its main components and study the changing positions of countries in the EU-wide income distribution. We discuss some policy implications related to fostering lower income inequality, which does not primarily relate to the impact of inequality on long-term growth (which is a controversial issue), but more so on its impact on (un)equal opportunities and electoral votes.

Conversations for the Future of Europe - 2020: To guide the steps of the European Union and to mobilise its citizens so as to make policy change possible, it is not sufficient to analyse the past and criticise the present. It is necessary to develop concrete proposals for a better future and to subject them to critical multidisciplinary discussion. The aim of the Conversations is to facilitate this debate and inspire far-sighted, creative ideas for concrete and politically feasible projects which may guide the future development of the Union. A concern for political applicability, however, is compatible with creativity and boldness. Indeed, it may require it.