Research Cluster: OISP
Start Date: 31.05.2016
End Date: 30.05.2021
Inequality and prosperity
Funded by: Citigroup
Income inequality has increased substantially in many OECD countries in recent decades. As well as concerns about equity and fairness, inequality presents a major threat to long-term growth and prosperity. Technological change, globalization, the increasing role of finance, changes in the labour market and weakening redistribution of wealth and the incoming arising from it, are all factors that contribute to rising inequality.
While researchers disagree on the relative contribution of these elements – not least because they are all inter-related - the search for effective responses is still at an early stage, and even international organisations like the OECD and IMF are advancing very broad recommendations such as the prioritization of education and training.
Against this background, there is an urgent need to identify a coherent set of responses that would address rising inequality in a way that promotes inclusive growth, to inform both our understanding and policy debates.
A team led by Professor Brian Nolan will focus on four central themes in order to respond to the various drivers of economic inequality and the ways inequality impacts on growth and prosperity.
Inequality and rewarding work
A central challenge for 21st century capitalism is to generate jobs that offer adequate rewards for ordinary workers and underpin a sustainable standard of living. This research stream will seek to tease out the complex relationship between productivity, inequality and living standards. The team will seek to deepen understanding of why patterns of change in occupational structures have varied so widely across countries, taking into account technological change as a disrupter. It will seek to find policy levers that can promote inclusive growth and solutions that can sustain high employment without having to accept that much of it will be at low wages.
Inequality, Wealth and Opportunity
This stream of research will probe the relationship between increasing income inequality and the concentration of wealth at the top, and the growing importance of income from capital. It will ask whether wealth and the income arising from it can be spread more widely and what avenues are open to the state to achieve this. In addition, it will consider how policies can ensure that the workforce of the future can approach its full productive capacity, underpinning prosperity for ordinary families.
Inequality, Taxation and Social Transfers
The role of the state in redistribution via taxes and transfers is critical to growth and prosperity. The research will assess how best to strengthen the effectiveness of social transfers for working-age households, and align them with labour market institutions (such as minimum wages) to form a coherent strategy to encourage labour market participation and investment in human capital while supporting living standards.
Inequality and the Firm: Broadening Corporate Social Responsibility?
Companies are affected by many of the potential policy responses to increasing inequality, as they are by the drivers of inequality themselves. In addition to teasing out those effects, though, this stream of research will consider more broadly what role companies could or should be expected to play in responding to rising inequality and promoting inclusive growth.
The programme will directly address current concerns about rising inequality and its impacts; yield important insights into the drivers of increasing inequality and its effects; and identify a coherent set of responses aimed at promoting inclusive growth and prosperity. While primarily focused on the currently rich countries, it will seek to incorporate key trends in, and implications for, those seeking to join them, most importantly China and India.