Home > Uncategorized > The US vs. Western Europe 1980 – 2016

The US vs. Western Europe 1980 – 2016

In 1980 the bottom 50% of the population in the US received 20% of the national income and 23% in Western Europe. By 2016 the share of the bottom 50% of the US population received declined to 13% while in Western Europe the bottom 50% held on to 22% of the national income. The top 1% in Western Europe increased their share to 12% in 2016. Meanwhile in the US the top 1%increased their share of the national income from 10% in 1980 to 20% in 2016.

A key question is what policies and forces are at play in Western Europe that maintained the bottom 50%’s share?

top 1% vs. bottom 50% national income shares in the US and Western Europe 1980-2016: diverging income inequality trajectories

Income for bottom 50% and top 1% in Western Europe - stable shares.

from American Delusions

  1. Clement-Pitiot
    November 7, 2019 at 4:17 pm

    Temporary compensation effect between transtion economies and old western european economies explains why le US inegality effect is possibly hidden in the global European statistics. Neoliberalism economic dogma has the same disruptive impact on real economy and society in fact in Europe and in the US. Don’t trust the European illusion without caution.

    • November 7, 2019 at 9:08 pm

      I can see your point, Clement. Perhaps the larger unearned incomes in Europe are hidden in tax havens and Swiss bank accounts.

    • Calgacus
      November 12, 2019 at 2:10 am

      Indeed. As James Galbraith pointed out – he wrote a book about it, the sort of measures used above are not entirely appropriate any more. With the integration of Europe into the EU one gets a completely different result. Taking Europe as a whole – not country by country – we get a USA sized entity – but one that is MORE unequal, more stratified than the USA, not less.

  2. Ken Zimmerman
    November 10, 2019 at 12:44 pm

    The authors of the ‘World Inequality Report 2018’ (Facundo Alvaredo, Lucas Chancel, Thomas Piketty, Emmanuel Saez, and Gabriel Zucman) take Western Europe as the more preferred pattern. They offer the following explanation of why the US diverges from it.

    The income-inequality trajectory observed in the United States is largely due to massive
    educational inequalities, combined with a tax system that grew less progressive despite
    a surge in top labor compensation since the 1980s, and in top capital incomes in the 2000s. Continental Europe meanwhile saw a lesser decline in its tax progressivity, while wage inequality was also moderated by educational and wage-setting policies that were relatively more favorable to low and middle-income groups. In both regions, income inequality between men and women has declined but remains particularly strong at the top of the distribution.

    Any feedback on their explanation?

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