Income Inequality Continues to Rise in OECD Countries

A recent OECD report shows that the wealth gap in most rich countries continues to grow wider, consistent with an upward trend during the past few decades. The Economist blogged: "The Gini coefficient, a measure of inequality in which zero corresponds to everyone having the same income and one means the richest person has all the income, increased by almost 10% from 0.29 in 1985 to 0.32 in 2008, for working-age people in OECD countries."

Changes in wages have benefited the top 1% of earners most, but relative gains are not limited to them, as "the pay of the richest 10% of employees has increased at a far greater rate than that of the poorest 10% of employees." Gains in technology, because they "disproportionately benefit...high-earning workers," have contributed to increases in income inequality. High earners tend to marry other high earners, which only exacerbates this growing inequality. In addition, "governments are doing less to redistribute wealth than they have done in the past."

The report, however, shies away from identifying globalization as the cause of increased income inequality. Instead, as summarized by the Economist, it argues that "one of the many reasons for the rise in income inequality is that more people are in work now (or at least they were before the financial crisis hit) compared with the 1970s."