Community Research and Development Information Service - CORDIS


DRIWGHP Report Summary

Project ID: 340831
Funded under: FP7-IDEAS-ERC
Country: France

Mid-Term Report Summary - DRIWGHP (The Distribution and Redistribution of Income and Wealth: A Global and Historical Perspective)

The Distribution and Redistribution of Income and Wealth: A Global and Historical Perspective

Very little is known about the long-run tendencies of the distributions of income and wealth in capitalist societies. Yet inequality has generated heated political discussions and theoretical speculations for centuries. To this day it remains a central focus of much research in social science. Unfortunately, the passionate debate has not been based on much scientific knowledge so far. This is due both to the limitations of existing data, and to a lack of a proper articulation between available data and theoretical models.

The main objectives of our project are to better understand the long run rise in inequality, and to develop a unified empirical and theoretical approach to the distribution and redistribution of income and wealth. It consists of two parts.

Part 1. We are constructing a new World Wealth and Income Database (WID) that will be made public through a dedicated website, and that will replace the current database accessible at Existing inequality data sets - including the former World Top Incomes Database (on line until November 2015) - are insufficient, firstly because many countries are not well covered, and mostly because available series focus on income (or even consumption) inequality and usually do not cover wealth inequality. This is unfortunate, because the theoretical forces at play are very different for income and wealth distributions. Thanks to extensive new primary data collection, the new WID seeks to remedy both deficiencies and allow for a better articulation between available data and theoretical models, and to cover the whole support of the wealth and income distributions, and not only the top.

Part 2. We use this new database to test for the various mechanisms explaining the rise in inequality, and to develop a unified empirical and theoretical approach to the distribution and redistribution of income and wealth. In particular, we explore the extent to which low growth and high returns to wealth push towards higher wealth-income ratios as well as rising wealth concentration. In the near future this mechanism is likely to be particularly strong in low growth Europe (especially in countries with negative population growth). In the long run it can also operate at the level of the global distribution of wealth. We also study the relative importance of market forces and institutions in the unprecedented rise of top labor incomes.

During the first thirty months of the project considerable progress has been made regarding Part 1:
a) The newly designed website for the WID is very near completion, and in testing phase. We expect it to be published on line between late 2016 and early 2017. It will include user-friendly graphics, and advanced tools for data downloading.
b) We have published on line (in the current version of the WID), series of wealth/income ratios for twenty countries, covering, in some cases, two hundred years.
c) We have extended the geographical coverage of the top income share series to forty countries, and have updated the existing series.
d) We have developed a methodology to produce Distributional National Accounts (DINA), that is, annual estimates of the distribution of income and wealth using concepts that are consistent with the macroeconomic national accounts. The methodology has been applied to the United States and France, and is being applied to the UK and Spain. The first results confirm the increase in inequality described in previous work, but on more solid and robust grounds. The estimates will be made available through the new WID.
e) We have made considerable progress in the estimation of wealth inequality in the long run in the United States, France, UK, Spain, Sweden, Italy, inscribed in the context of DINA. The estimates will also be made available through the new WID.
f) Renewed efforts in data collection have made it possible to include in the analysis several countries of Africa (South Africa, Ivory Coast, Algeria, Mauritius, Zambia, etc. ), Latin America (Mexico, Chile, Brazil), and Asia (Chine) concerning wealth/income ratios as well as income inequality (through the combination of survey and tax data).

In sum, we have made substantial progress in three directions: (i) in covering more countries, in particular among the emerging countries of Asia, Africa and Latin America; (ii) in providing series on wealth-income ratios and the distribution of wealth, and not only on income; and (iii) in offering series on the entire distribution of income and wealth (not only the top), and in producing Distributional National Accounts (DINA).

Reported by

Follow us on: RSS Facebook Twitter YouTube Managed by the EU Publications Office Top