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World povertyNew policies to defeat an old enemy$
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Peter Townsend and David Gordon

Print publication date: 2002

Print ISBN-13: 9781861343956

Published to Policy Press Scholarship Online: March 2012

DOI: 10.1332/policypress/9781861343956.001.0001

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Is rising income inequality inevitable? A critique of the ‘Transatlantic Consensus’

Is rising income inequality inevitable? A critique of the ‘Transatlantic Consensus’

(p.25) TWO Is rising income inequality inevitable? A critique of the ‘Transatlantic Consensus’
World poverty

Tony Atkinson

Policy Press

This chapter addresses one of the most important economic issues facing societies and the world as a whole: rising income inequality. It takes issue with two widely circulated assertions: that rising inequality is inevitable; and that the ‘Transatlantic Consensus’, or the proposition that increased inequality in the US and high unemployment in Continental Europe are due to a shift of demand away from unskilled workers towards skilled workers, is an acceptable explanation of that growth. The chapter shows how wage bargaining and income policies can influence the wages dispersion itself. It calls attention to the varying importance in different countries of redistributive policies, which have for many years exerted significant effects on the dispersion of after-tax incomes. Because economic growth has been uneven, the discussion argues that major lessons can be learnt from the variations in policy which caused that differential growth.

Keywords:   rising income inequality, Transatlantic Consensus, US, Continental Europe, differential growth, redistributive policies, wage bargaining

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