Figure 1.1 Inequality, Economic Growth, Employment Growth, and Real Income Growth in Sweden, Germany, and the United States, 198s and 199s Posttax-Posttransfer Individual Earnings Inequality Household Earnings Inequality Income Inequality 5th Percentile/1th Percentile Ratio 2.5 2. 1.5 1..5. 1979 2 SWE GE US Gini.5.4.3.2.1. Late 197s 2.5 Late 197s 2.4 SWE GE US Gini.3.2.1. SWE GE US GDP per Capita Employment Pretax-Pretransfer Household Income at the 1th Percentile of the Income Distribution Thousands of 1995 U.S. Dollars 4 3 2 1 1979 2 SWE GE US Percentage of Working-Age Population 1 75 5 25 1979 2 SWE GE US Thousands of 2 U.S. Dollars 12 9 6 3 1979 2 SWE GE US Note: Individual earnings inequality data refer to those employed full-time year-round. Posttax-posttransfer income inequality data are for households. GDP per capita and 1th-percentile household incomes are converted to U.S. dollars using purchasing power parities. Employment refers to the share of the working-age population that are employed. Data for inequality of household earnings and incomes and for 1th-percentile household incomes refer to working-age households. For variable descriptions and data sources, see the appendix.
Figure 3.1.5.4 Pretax-Pretransfer and Posttax-Posttransfer Household Income Inequality in Thirteen Countries, Mid-199s Pretax-Pretransfer Posttax-Posttransfer Gini.3.2.1. SWE FI NW DK NL GE FR SWI IT CN ASL UK US
Figure 3.2.4.3 Posttax-Posttransfer Household Income Inequality in Thirteen Countries, Mid-198s and Mid-199s Mid-198s Mid-199s Gini.2.1. SWE FI NW DK NL GE FR SWI IT CN ASL UK US
Figure 3.3.5.4 Household Earnings Inequality in Thirteen Countries, Mid-198s and Mid-199s Mid-198s Mid-199s Gini.3.2.1. NW DK FI SWE SWI GE NL IT FR CN ASL UK US
Figure 3.4 Change in Household Earnings Inequality by Change in Employment, Thirteen Countries, Mid-198s to Mid-199s.1 r =.79 FI SWE Change in Household Earnings Inequality (Gini).5. NW IT DK CN FR UK GE US ASL SWI.5 12 6 6 12 Change in Employment (Percentage of Working-Age Population) NL
Figure 3.5 Change in Household Earnings Inequality by Change in Employment, U.S. States, Mid-198s to Mid-199s Change in Household Earnings Inequality (Gini).16.12.8.4..4 NH NY CA MA NJ RI MD CT ME r =.41 VA AZ PA MO TN KS KY WA FL WVMT NV OR TX OKID NC IL OH LA AR DE SC NM MS UT GA MI MIN VT CO WY AL WI 5 1 15 2 Change in Employment (Percentage of Working-Age Population) NC NE IA
Figure 3.6 Change in Total Employment and in Female Employment in Thirteen Countries, Mid-198s to Mid-199s Change in Employment (Percentage) 12 6 6 12 DK NW SWE FI NL SWI GE FR Total IT Female US ASL UK CN
Figure 3.7 Redistribution in Thirteen Countries, Mid-198s and Mid-199s Redistribution (Household Earnings Gini Minus Posttax-Posttransfer Income Gini).2.15.1.5. SWE FI DK NW NL FR GE IT Mid-198s SWI Mid-199s UK ASL CN US
Figure 3.8 Change in Redistribution by Change in Employment, Thirteen Countries, Mid-198s to Mid-199s Change in Redistribution (Household Earnings Gini Minus Posttax-Posttransfer Income Gini).1.5. FI SWE NW CN DK IT FR GE ASL UK SWI.5 12 6 6 12 US Change in Employment (Percentage of Working-Age Population) NL
Figure 3.9 Estimated Impact of Changes in Employment on Changes in Redistribution, Depending on the Level of Welfare State Generosity, Mid-198s to Mid-199s Change in Redistribution (Household Earnings Gini Minus Posttax-Posttransfer Income Gini).1.5..5 FI ( 12) DK ( 2) SWE ( 8) 1 5 9 Ten-Point Employment Decline Five-Point Employment Decline Five-Point Employment Increase Ten-Point Employment Increase Unemployment Benefit Replacement Rate (Percentage) Source: Author s analysis. Note: Numbers in parentheses indicate change in employment.
Figure 3.1 Change in Household Earnings Inequality and Change in Posttax-Posttransfer Household Income Inequality in Thirteen Countries, Mid-198s to Mid-199s Change in Gini.1.5. Household Earnings Posttax-Posttransfer Household Income.5 SWE NW DK FI NL FR SWI GE IT CN ASL US UK
Table 3.1 Countries and s Included in the Analyses Mid-198s Mid-199s Nordic Denmark 1987 1997 Finland 1987 1995 Norway 1986 1995 Sweden 1987 1995 Continental France 1984 1994 Germany 1984 1994 Italy 1986 1995 Netherlands 1983 1994 Switzerland 1982 1992 Anglo Australia 1985 1994 Canada 1987 1997 United Kingdom 1986 1995 United States 1986 1997
Table 3.2 Regression Results: Determinants of Change in Household Earnings Inequality, Mid-198s to Mid-199s Full Best All Possible Models Model Model Minimum Median Maximum Change in earnings.31.34.13.15.35 inequality among (2.5) (2.28) (.57) (.61) (2.54) full-time year-round employed individuals Change in.69.75.87.64.52 employment (4.31) (4.95) (3.64) (5.8) (2.49) Change in single-.9.11.51.69 earner households (.4) (.49) (2.54) (2.33) Change in marital.34.35.26.36.65 homogamy (1.71) (2.37) (1.16) (1.82) (2.2) Source: Author s analysis; see appendix. Notes: Standardized coefficients, with absolute t-ratios (based on heteroskedasticityrobust standard errors) in parentheses. OLS regressions. Results for all possible models are low, median, and high coefficient for each variable from regressions using all possible combinations of the independent variables (four variables, fifteen regressions). Best model regression is the one with the largest adjusted R-squared. All variables are measured as mid-199s value minus mid-198s value. Minimum and maximum R-squared:.2,.75. N = 13.
Figure 4.1 Catch-Up-Adjusted Economic Growth by Income Inequality Circa 198, Fifteen Countries, 198 to 2 Average Annual Growth Rate of Real GDP per Capita, Adjusted for Catch-Up Effects (Percentage).8.4..4 SWE FI NW BE AUS GE NL DK ASL UK CN FR US r =.13.18.23.28.33 IT SWI Posttax-Posttransfer Income Inequality (Gini, LIS)
Figure 4.2 Catch-Up-Adjusted Economic Growth by Income Inequality Circa 198, U.S. States, 198 to 2 Average Annual Growth Rate of Real GSP per Capita, Adjusted for Catch-Up Effects (Percentage) 1.5. 1.5 NH MA CT DE NJ NY RI GA NC VA MD CO MIN CA VTWA IL TN ME PAOR SC UT SD IN WIOH NE MO TX FL NVMI KY AL AZ KS NM AR WY ID IA ND MT WV OK.36.39.42.45 Pretax-Posttransfer Income Inequality (Gini, U.S. Census Bureau) r =.23 MS LA
Figure 4.3 Income Inequality in the United States, 1947 to 2 1.5 Index: 1973 = 1 1..5. Gini Income Share of Top 1 Percent 195 1955 196 1965 197 1975 198 1985 199 1995 2 Figure 4.4 Savings and Investment in the United States, 1947 to 2 Index: 1973 = 1 (Five- Moving Average Beginning at t 2) 1.5 1..5. Savings Investment 195 1955 196 1965 197 1975 198 1985 199 1995 2
Figure 4.5 Work Effort in the United States, 1947 to 2 2. 1.5 Index: 1973 = 1 1..5. Labor Force Participation Productivity 195 1955 196 1965 197 1975 198 1985 199 1995 2
Figure 4.6 Educational Attainment in the United States, 1947 to 2 2.5 Index: 1973 = 1 2. 1.5 1..5 Share of Persons Age Twenty-five and over with a Four- College Degree. 195 1955 196 1965 197 1975 198 1985 199 1995 2
Figure 4.7 Economic Growth in the United States, 1947 to 2 6 Growth of Real GDP per Capita (Percentage) 4 2 2 195 1955 196 1965 197 1975 198 1985 199 1995 2
Figure 4.8 Family Income Trends in the United States, 1947 to 21 Annual Income (in 21 Dollars) 175, 15, 125, 1, 75, 5, 25, 95th Percentile 8th Percentile 6th Percentile 4th Percentile 2th Percentile 1945 195 1955 196 1965 197 1975 198 1985 199 1995 2 25
Figure 4.9 Poverty in the United States, 1959 to 2 25 Poverty Rate (Percentage) 2 15 1 5 Official Income Definition Alternative Income Definition 196 1965 197 1975 198 1985 199 1995 2
Table 4.1 Regression Results: Effect of Income Inequality and Other Variables on Catch-Up-Adjusted Economic Growth, Fifteen Countries, 198 to 2 All Possible Models of Three or Fewer Variables Best Models Minimum Median Maximum 1 2 Income inequality.57.22.1.44.47 (posttax-post- (1.84) (.78) (.11) (2.14) (2.3) transfer), circa 198 Other variables Government tax.71.67.39.38.39 revenues (2.3) (2.25) (1.44) (1.58) (1.79) Terms of trade.17.52.59.13 (.65) (1.95) (2.24) (.56) Educational.55.68.7.48.55 attainment (2.46) (3.) (3.8) (1.67) (2.44) Inequality coefficient.5.13.3 when investment is (1.56) (.51) (.1) added Inequality coefficient.43.7.5 when change in (1.43) (.25) (.15) investment is added Inequality coefficient.56.14.4 when labor force par- (1.73) (.41) (.14) ticipation is added Inequality coefficient.58.3.17 when change in labor (1.73) (.99) (.67) force participation is added Inequality coefficient.47.24.16 when educational (2.3) (.98) (.65) attainment is added Inequality coefficient.39.1.5 when social capital is (1.21) (.4) (.19) added Source: Author s analysis; see appendix. Notes: Standardized coefficients, with absolute t-ratios (based on heteroskedasticity-robust standard errors) in parentheses. OLS regressions. Results in columns 1, 2, and 3 are from regressions using all possible combinations of three or fewer of the independent variables (12 variables, 296 regressions). Variables included in the regressions but not reported here owing to inconsistent signs and lack of absolute t-ratios greater than 1. in at least half of the regressions are: nonworking-age share of the population, change in nonworking-age share of the population, real long-term interest rates, left government, inflation, trade, change in trade, union concentration, institutional coherence, and firm-level economic cooperation. Best models regressions are those with the largest adjusted R-squared. The results in the lower portion of the table are from regressions with income inequality, the variable listed for the particular row of the table (for example, investment), and each of the other eleven control variables (eleven regressions). Aside from income inequality, all levels variables are measured as period averages. Change variables are measured as the average annual rate of change. Minimum and maximum R-squared:.2,.55. N = 15.
Table 4.2 Regression Results: Effect of Income Inequality and Other Variables on Catch-Up-Adjusted Economic Growth, U.S. States, 198 to 2 1 2 3 4 5 6 Income inequality.18.4.17.3.22.21 (pretax-posttransfer), (1.56) (.26) (1.39) (.2) (1.85) (1.37) 1979 Other variables Nonworking-age.45.45.51.38.47.43 population (3.65) (3.65) (3.28) (3.12) (3.81) (2.87) Government tax.18.12.17.12.14.18 revenues (1.55) (1.1) (1.46) (1.4) (1.22) (1.55) Business.14.9.13.5.13.15 concentration (1.41) (.79) (1.16) (.42) (1.21) (1.2) Economic develop-.14.24.19.12.15.23 ment policies (1.85) (2.3) (1.54) (1.4) (1.16) (1.81) Military expenditures.19.18.18.5.18.19 by the federal (1.61) (1.51) (1.46) (.36) (1.56) (1.6) government Labor force.21 participation (1.2) Change in labor.8 force participation (.61) Educational attainment.37 (2.36) Change in educational.18 attainment (1.51) Social capital.4 (.23) R-squared.5.51.5.56.52.5 Source: Author s analysis; see appendix. Notes: Standardized coefficients, with absolute t-ratios (based on heteroskedasticity-robust standard errors) in parentheses. Other independent variables were included but were inconsistently signed and had absolute t-ratios smaller than 1. in more than half of the regressions: change in nonworking-age population, left government, unionization, change in unionization, union concentration, sunbelt, change in military expenditures. Aside from income inequality, all levels variables are measured as period averages. Change variables are measured as the average annual rate of change. N = 48.
Figure 5.1 Earnings Inequality and Employment in Germany and the United States, 1979 to 2 Individual Earnings Inequality (5th Percentile/1th Percentile) 2.2 1.7 1.2 1979 1989 1999 Employment Rate (Percentage) 82 72 62 GE US GE US 52 1979 1989 1999
Figure 5.2 Employment in Private-Sector Consumer Services in Fourteen Countries, 1979 and 1995 3 Percentage of Population Age Fifteen to Sixty-four 2 1 1979 1995 NW SWE DK FI NL GE BE FR IT ASL US UK CN JA
Figure 5.3 Total Employment in Fourteen Countries, 1979 and 2 Percentage of Population Age Fifteen to Sixty-four 8 6 4 2 NW DK SWE FI NL GE FR BE 1979 2 IT US UK CN ASL JA
Figure 5.4 Private-Sector Consumer Services Employment Growth by Earnings Inequality in Fourteen Countries Employment in Private-Sector Consumer Services (Percentage of Population Age Fifteen to Sixty-four), 1995 Minus 1979 9 6 3 SWE NW DK BE IT FI NL GE UK US 3 1.2 1.5 1.8 2.1 JA ASL FR CN r =.65 Earnings Inequality Among Full-time Employed Individuals (5th Percentile/1th Percentile), 198 to 1995
Figure 5.5 Total Employment Growth by Private-Sector Consumer Services Employment Growth in Fourteen Countries Total Employment (Percentage of Population Age Fifteen to Sixty-four), 2 Minus 1979 2 1 1 FI SWE NW DK FR NL CN BE GE IT US ASL UK JA r =.36 3 3 6 9 Employment in Private Consumer Services (Percentage of Population Age Fifteen to Sixty-four), 1995 Minus 1979
Figure 5.6 Total Employment Growth by Earnings Inequality in Fourteen Countries Total Employment (Percentage of Population Age Fifteen to Sixty-four), 2 Minus 1979 2 1 NW BE DK SWE IT FI NL ASL JA GE FR UK CN US r =.41 1 1.2 1.5 1.8 2.1 Earnings Inequality Among Full-time Employed Individuals (5th Percentile/1th Percentile), 198 to 1998
Figure 5.7 Private-Sector Consumer Services Employment Growth by the Tax Rate in Fourteen Countries Employment in Private-Sector Consumer Services (Percentage of Population Age Fifteen to Sixty-four), 1995 Minus 1979 9 6 3 3 JA ASL US UK GE BE CN NL IT NW DK FI FR r =.84 SWE 3 4 5 6 7 8 Tax Rate on a Typical Worker (Percentage), 198 to 1995
Figure 5.8 Private-Sector Consumer Services Employment Growth by Employment Regulations in Fourteen Countries Employment in Private-Sector Consumer Services (Percentage of Population Age Fifteen to Sixty-four), 1995 Minus 1979 9 6 3 3 US UK JA CN DK ASL BE NL NW FI GE FR r =.65 IT SWE 2 4 6 8 Employment Regulations, 198 to 1995
Table 5.1 Regression Results: Effect of Earnings Inequality and Other Variables on Employment Growth in Private-Sector Consumer Services, 1979 to 1995 All Possible Models of Three or Fewer Variables Best Models Minimum Median Maximum 1 2 Earnings inequality.3.45.66.7.16 among full-time.44 6.1 8.91.96 2.15 year-round employed (.72) (1.79) (1.85) (.34) (.84) individuals Other variables Growth of real GDP..45.75.21 (.) (2.) (3.31) (1.34) Change in outward.89.44.8 direct foreign (3.32) (2.14) (.39) investment Public employment.64.41.9 (3.5) (1.76) (.33) Change in public.86.53.27.33 employment (4.99) (2.11) (1.19) (2.28) Tax rate on workers.9.74.57.42.57 (5.43) (3.32) (2.77) (2.76) (3.12) Unemployment.81.47.3.2.31 benefit replacement (3.79) (1.55) (.8) (2.21) (2.97) rate Change in.86.51.16 unionization (3.57) (2.2) (.54) Source: Author s analysis; see appendix. Notes: Standardized coefficients, with absolute t-ratios (based on heteroskedasticity-robust standard errors) in parentheses. The numbers in the second row for the earnings inequality variable are unstandardized coefficients. OLS regressions. Results in columns 1, 2, and 3 are from regressions using all possible combinations of three or fewer of the independent variables (16 variables, 696 regressions). Variables included in these regressions but not reported here owing to inconsistent signs and lack of absolute t-ratios greater than 1. in at least half of the regressions are: trade, change in trade, outward direct foreign investment, real long-term interest rates, change in tax rate on workers, change in unemployment benefit replacement rate, unemployment benefit duration, and change in unemployment benefit duration. Best models regressions are those with the largest adjusted R-squared. Active labor market policy, employment regulations, wage coordination, unionization, and left government are not included in these regressions because they are too highly correlated with earnings inequality. Levels variables are measured as period averages. Change variables are measured as 1995 value minus 1979 value. Minimum and maximum R-squared:.1,.91. N = 14.
Table 5.2 Regression Results: Effect of Earnings Inequality and Other Variables on Total Employment Growth, 1979 to 2 All Possible Models of Three or Fewer Variables Best Models Minimum Median Maximum 1 2 Earnings inequality.17.58.87.9.8 among full-time 2.72 1.1 15.19 1.59 1.38 year-round employed (.69) (2.8) (2.88) (.78) (.4) individuals Other variables Growth of real GDP.31.63.85.23 (1.54) (2.55) (3.57) (.99) Agricultural and.82.4.23.35.33 manufacturing (5.53) (2.29) (1.11) (3.71) (2.68) employment in 1979 Outward direct.71.36.12.28 foreign investment (3.62) (1.39) (.52) (3.36) Tax rate on workers.96.76.48.44.69 (4.3) (3.18) (2.1) (2.48) (5.28) Change in tax rate.76.4.9 on workers (3.7) (1.45) (.34) Source: Author s analysis; see appendix. Notes: Standardized coefficients, with absolute t-ratios (based on heteroskedasticity-robust standard errors) in parentheses. The numbers in the second row for the earnings inequality variable are unstandardized coefficients. OLS regressions. Results in columns 1, 2, and 3 are from regressions using all possible combinations of three or fewer of the independent variables (17 variables, 833 regressions). Variables included in the regressions but not reported here owing to inconsistent signs and lack of absolute t-ratios greater than 1. in at least half of the regressions are: trade, change in trade, change in outward direct foreign investment, real long-term interest rates, public employment, change in public employment, unemployment benefit replacement rate, change in unemployment benefit replacement rate, unemployment benefit duration, change in unemployment benefit duration, and change in unionization. Active labor market policy, employment regulations, wage coordination, unionization, and left government are not included in these regressions because they are too highly correlated with earnings inequality. Levels variables are measured as period averages. Best models regressions are those with the largest adjusted R-squared. Change variables are measured as 2 (or most recent year) value minus 1979 value. Minimum and maximum R-squared:.1,.86. N = 13 (Netherlands is omitted).
Figure 6.1 Relative Poverty by Welfare State Generosity, Fourteen Countries, Mid-199s Relative Poverty Rate (Percentage), Posttax-Posttransfer, with Poverty Line Set at 5 Percent of the Median 18 14 1 6 US IT UK ASL CN SWI BE FR GE DK NW SWE NL r =.79 2 2 6 1 14 Government Cash Social Expenditures on the Working-Age Population (Percentage of GDP) FI Note: Poverty data refer to working-age households.
Figure 6.2 Real Pretax-Pretransfer Incomes at the 5th, 1th, 15th, 2th, and 25th Percentiles in Five Countries, Mid-197s to 2 2 U.S. Dollars per Equivalent Person 2 U.S. Dollars per Equivalent Person 18, 12, 6, 18, 12, 6, Sweden 197 1975 198 1985 199 1995 2 United Kingdom 197 1975 198 1985 199 1995 2 2 U.S. Dollars per Equivalent Person 2 U.S. Dollars per Equivalent Person 18, 12, 6, 18, 12, 6, Germany 197 1975 198 1985 199 1995 2 Canada 197 1975 198 1985 199 1995 2 2 U.S. Dollars per Equivalent Person 18, 12, 6, United States 197 1975 198 1985 199 1995 2 25th Percentile 2th Percentile 15th Percentile 1th Percentile 5th Percentile
Figure 6.3 Pretax-Pretransfer Absolute Poverty in Five Countries, Mid-197s to 2 Poverty Rate Multiplied by Poverty Gap 25 2 15 1 5 SWE UK US GE CN 197 1975 198 1985 199 1995 2
Figure 6.4 Potential Macroeconomic Determinants of Change in Pretax-Pretransfer Absolute Poverty in Five Countries, Mid-197s to 2 1995 U.S. Dollars 35, 3, 25, 2, 15, SWE UK US GDP per Capita 1, 197 1975 198 1985 199 1995 2 GE CN Percentage of Working-Age Population 85 75 65 Employment SWE GE UK CN 55 US 197 1975 198 1985 199 1995 2 Change in Pretax-Pretransfer Poverty 6 3 SWE CN GE UK US 3.4.45.5.55 Change in Pretax-Pretransfer Poverty 6 3 GE SWE UK CN US 3 5 5 1 Change in Log of Real per Capita GDP (1995 U.S. Dollars) Change in Employment (Percentage of Working-Age Population)
Figure 6.5 Employment and Other Potential Determinants of Change in Pretax-Pretransfer Absolute Poverty in Sweden, Mid-197s to 2 1th-Percentile Earnings Among the Employment Full-Time Employed Percentage of Working-Age Population 85 75 65 1975 198 1985 199 1995 2 2 U.S. Dollars 18, 17, 16, 15, 1975 198 1985 199 1995 2 As a Share of All Households (Percentage) Single-Adult Households 35 25 15 1975 198 1985 199 1995 2 Poverty Rate Multiplied by Poverty Gap Pretax-Pretransfer Absolute Poverty 2 15 1 1975 198 1985 199 1995 2
Figure 6.6 Potential Welfare State Determinants of Change in Employment, Five Countries, Mid-197s to 2 Decommodification Tax Rate Change in Employment (Percentage) 1 5 5 1 US CN UK 2 GE 3 SWE 4 Change in Employment (Percentage) 1 US CN 5 UK GE 5 4 5 6 7 SWE 8 Esping-Andersen Decommodification Tax Rate on a Typical Worker Score (Percentage) Unemployment Benefit Level Unemployment Benefit Duration Change in Employment (Percentage) 1 US 5 UK GE 5 25 CN 5 75 SWE 1 Change in Employment (Percentage) 1 5 SWE 5. US CN.25.5 UK GE.75 Unemployment Benefit Replacement Rate (Percentage) Unemployment Benefit Duration (Index) Notes: Employment change (vertical axes) is change in employment as a share of the working-age population: 2 value minus mid-197s value. Welfare state measures (horizontal axes) are averages of levels from the mid-197s to 2 (or the most recent year for which data are available).
Figure 6.7 Posttax-Posttransfer Absolute Poverty in Five Countries, Mid-197s to 2 25 SWE GE Poverty Rate Multiplied by Poverty Gap 2 15 1 5 UK US CN 197 1975 198 1985 199 1995 2
Figure 6.8 Real Posttax-Posttransfer Incomes at the 5th, 1th, 15th, 2th, and 25th Percentiles in Five Countries, Mid-197s to 2 Sweden Germany 2 U.S. Dollars per Equivalent Person 18, 12, 6, 197 1975 198 1985 199 1995 2 2 U.S. Dollars per Equivalent Person 18, 12, 6, 197 1975 198 1985 199 1995 2 United Kingdom Canada 2 U.S. Dollars per Equivalent Person 18, 12, 6, 197 1975 198 1985 199 1995 2 2 U.S. Dollars per Equivalent Person 18, 12, 6, 197 1975 198 1985 199 1995 2 United States 2 U.S. Dollars per Equivalent Person 18, 12, 6, 197 1975 198 1985 199 1995 2 25th Percentile 2th Percentile 15th Percentile 1th Percentile 5th Percentile
Figure 6.9 Net Government Transfers to the Poor in Five Countries, Mid-197s to 2 2 U.S. Dollars 6, 4,5 3, 1,5 SWE UK US GE CN 197 1975 198 1985 199 1995 2 Note: Average transfers (cash and near-cash) minus taxes to working-age households with pretax-pretransfer incomes below the poverty line.
2 U.S. Dollars per Equivalent Person Figure 6.1 Real Income Levels in Five Countries, 2 75, SWE 2 6, GE 2 UK 1999 45, CN 1998 US 2 3, 15, 5 15 25 35 45 55 65 75 85 95 Percentile 2 U.S. Dollars per Equivalent Person 16, 12, 8, 4, SWE 2 GE 2 UK 1999 CN 1998 US 2 5 1 15 2 25 Percentile
Figure 6.11 Functional Literacy Among Adults in Five Countries, Mid-199s Share of the Population (Percentage) 4 3 2 1 Level 1 Levels 4 and 5 SWE GE CN UK US Source: Based on the OECD s 1994 1995 International Adult Literacy Survey (OECD 1998a, 54). Note: Level 1 is the lowest possible score (indicating functional illiteracy); level 5 is the highest.
Figure 6.12 Annual Hours Worked in Five Countries, 2 2, Hours per Employed Person 1,5 1, 5 GE SWE UK CN US
Table 6.1 Indicators of Welfare State Size and Generosity in Five Countries, Mid-197s to 2 United United Sweden Germany Kingdom Canada States Overall Esping-Andersen decommodification a 198 39 28 23 22 14 Government transfers as percentage of GDP b 1965 to 1975 11 13 9 8 7 199 to 2 21 18 14 13 13 Tax rate on a typical worker c 1965 to 1975 57 45 43 4 38 199 to 1995 78 52 47 5 45 Working-age population Government cash expenditures on the working-age population as percentage of GDP d 198 7 4 5 5 3 199 to 1999 9 6 6 6 3 Unemployment benefit replacement rate e 1965 to 1975 42 42 39 49 27 199 to 1998 9 38 27 57 28 Unemployment benefit eligibility duration f 1965 to 1975..57.59.31.17 199 to 1995.4.61.7.22.18 a 198 is the only year for which these data are available. Source: Esping-Andersen (199, 52). b Source: My calculations from data in OECD (various years [b], table 6.3). c Sum of the average income, payroll, and consumption tax rates for a typical worker. 1995 is the most recent year for which data are available. Source: Nickell et al. (21, 32). d Sum of cash family benefits and benefits for unemployment, disability, occupational injury and disease, sickness, and other contingencies (mainly low income) as a share of GDP. 198 is the earliest year for which these data are available. Source: My calculations from data in OECD (21c). e Gross replacement rate (share of previous earnings) for a worker with earnings at the thirty-third percentile, in the first year after losing the job. Source: OECD (n.d., a). f Duration of eligibility for unemployment compensation (index). 1995 is the most recent year for which data are available. Source: Nickell et al. (21, 27).
Table 6.2 Sources of Income for Four Segments of the Pretax-Pretransfer Poor in Five Countries, 2 Market Income as a Percentage of the Poverty Line to 25 26 to 5 51 to 75 76 to 1 Percent Percent Percent Percent Sweden 2 Share of all persons 1% 4% 5% 8% Income Market income $853 $4,824 $8,184 $11,273 Government transfer 1,312 8,535 6,355 6,85 income Other income 148 393 52 422 Taxes 2, 3,176 3,62 4,615 Posttax-posttransfer 9,313 1,576 11,439 13,165 income Germany 2 Share of all persons 7% 2% 3% 5% Income Market income $838 $4,87 $8,17 $11,157 Government transfer 7,349 5,338 4,432 4,11 income Other income 973 744 295 549 Taxes 277 83 1,65 2,355 Posttax-posttransfer 8,883 1,59 11,94 13,362 income United Kingdom 1999 Share of all persons 16% 4% 4% 5% Income Market income $582 $4,769 $7,933 $11,217 Government transfer 8,641 5,27 3,988 2,779 income Other income 135 63 255 333 Taxes 28 838 1,569 2,61 Posttax-posttransfer 9,15 9,768 1,67 11,728 income Canada 1998 Share of all persons 8% 4% 4% 5% Income Market income $786 $4,484 $8,19 $11,154 Government transfer 6,789 4,96 4,31 3,976 income Other income 144 625 614 468 (Table continues on p. 117.)
Table 6.2 Continued Market Income as a Percentage of the Poverty Line to 25 26 to 5 51 to 75 76 to 1 Percent Percent Percent Percent Taxes 126 344 782 1,372 Posttax-posttransfer 7,593 9,725 12,152 14,226 income United States 2 Share of all persons 5% 3% 4% 5% Income Market income $938 $4,956 $8,42 $11,182 Government transfer 4,898 3,675 2,747 1,914 income Other income 485 53 452 372 Taxes 6 417 744 1,171 Posttax-posttransfer 6,261 8,717 1,497 12,297 income Source: Author s calculations from LIS data; see appendix. Note: All income figures are averages, in 2 U.S. dollars per equivalent person. Other income includes child support and alimony, interpersonal transfers, and income from unidentified sources.
Appendix Table 6A.1 Absolute Poverty Rate and Poverty Gap Data in Five Countries, Selected s Poverty Poverty Rate Rate Gap Multiplied by Gap Sweden 1975 Pretax-pretransfer 34.6%.355 12.3 Posttax-posttransfer 49.7.234 11.6 Sweden 2 Pretax-pretransfer 26.2.545 14.3 Posttax-posttransfer 21.6.237 5.1 Germany 1973 Pretax-pretransfer 22.4.288 6.5 Posttax-posttransfer 35.6.227 8.1 Germany 2 Pretax-pretransfer 16.4.566 9.3 Posttax-posttransfer 16.9.251 4.2 West German regions 2 Pretax-pretransfer 13.5.568 7.7 Posttax-posttransfer 15.1.26 3.9 United Kingdom 1974 Pretax-pretransfer 39.6.345 13.7 Posttax-posttransfer 47.3.265 12.5 United Kingdom 1999 Pretax-pretransfer 28.3.687 19.4 Posttax-posttransfer 26.7.298 8. Canada 1975 Pretax-pretransfer 28.8.458 13.2 Posttax-posttransfer 29.2.335 9.5 Canada 1998 Pretax-pretransfer 21.6.567 12.2 Posttax-posttransfer 16.3.313 5.1 United States 1974 Pretax-pretransfer 22.7.512 11.6 Posttax-posttransfer 24.6.364 9. United States 2 Pretax-pretransfer 18.1.56 9.2 Posttax-posttransfer 16.8.344 5.8 Notes: Poverty line is $12,763 per equivalent person, in 2 U.S. dollars. Working-age households only. Poverty rate is the percentage of persons in households with incomes below the poverty line. Poverty gap is the poverty line minus the average income among households with poverty-level incomes, divided by the poverty line.
Figure 7.1 Developments in the Nordic Countries, 1979 to 2 5th Percentile/1th Percentile 2.2 1.7 Individual Earnings Inequality DK NW 1.2 1979 1989 1999 FI SWE Gini.48.38.28 Household Earnings Inequality DK NW FI SWE.18 1979 1989 1999 Gini Posttax-Posttransfer Income Inequality.48 DK FI NW SWE.38.28.18 1979 1989 1999 Percentage of Working-Age Population 82 72 62 Employment DK FI 52 NW SWE 1979 1989 1999 Percentage of GDP 15 1 5 Cash Social Expenditures DK FI NW SWE 1979 1989 1999 1th-Percentile Posttax-Posttransfer Income 13 Thousands of 2 U.S. Dollars 11 9 7 5 DK NW FI SWE 1979 1989 1999 Notes: Individual earnings inequality data refer to those employed full-time year-round. Data for household earnings inequality, posttax-posttransfer household income inequality, and 1th-percentile household income levels refer to working-age households. Employment refers to the share of the working-age population that is employed. Cash social expenditure data refer to government benefits aimed mainly at the working-aged. 1th-percentile income levels are converted to U.S. dollars using purchasing power parities and adjusted for inflation using the CPI- U-RS. For variable descriptions and data sources, see the appendix.
Figure 7.2 Developments in the Continental Countries, 1979 to 2 5th Percentile/1th Percentile Ratio 2.2 1.7 Individual Earnings Inequality FR IT GE NL 1.2 1979 1989 1999 Gini.48.38.28 Household Earnings Inequality FR IT GE NL.18 1979 1989 1999 Gini Posttax-Posttransfer Income Inequality.48 FR GE IT NL.38.28.18 1979 1989 1999 Percentage of Working-Age Population 82 72 62 Employment FR IT GE NL 52 1979 1989 1999 Percentage of GDP 15 1 5 Cash Social Expenditures FR IT GE NL 1979 1989 1999 Thousands of 2 U.S. Dollars 1th-Percentile Posttax-Posttransfer Income 13 FR GE 11 IT NL 9 7 5 1979 1989 1999 Note: See note to figure 7.1.
Figure 7.3 Developments in the Anglo Countries, 1979 to 2 Individual Earnings Inequality Household Earnings Inequality Posttax-Posttransfer Income Inequality 5th Percentile/1th Percentile Ratio 2.2 1.7 ASL UK CN US 1.2 1979 1989 1999 Gini.48.38.28 ASL UK CN US.18 1979 1989 1999 Gini.48.38.28 ASL UK CN US.18 1979 1989 1999 Percentage of Working-Age Population 82 72 62 Employment ASL UK CN US 52 1979 1989 1999 Percentage of GDP 15 1 5 Cash Social Expenditures ASL UK CN US 1979 1989 1999 Thousands of 2 U.S. Dollars 1th-Percentile Posttax-Posttransfer Income 13 11 9 7 ASL UK CN US 5 1979 1989 1999 Note: See note to figure 7.1.
Figure 7.4 Public Employment in Twelve Countries, 1979, 1989, and 1997 3 Percentage of Population Age Fifteen to Sixty-four 2 1 1979 1989 1997 DK NW SWE FI FR GE IT NL ASL CN UK US
Figure 7.5 Part-Time Employment in Twelve Countries, 1983 and 2 Percentage of Total Employment 3 2 1 1983 2 NW SWE DK FI NL GE FR IT ASL UK CN US
Figure 7.6 2 U.S. Dollars per Equivalent Person 25, 2, 15, 1, 5, Median Household Income in Twelve Countries, Mid-199s NW DK FI SWE GE NL FR IT US CN ASL UK
Table 7.1 Attitudes Toward Redistribution and Taxes in Sweden, 1992 and 1999 1992 1999 It is the responsibility of the Strongly agree 17% 24% government to reduce the Agree 36 36 differences in income between Neither 18 22 people with high incomes and Disagree 19 13 those with low incomes. Strongly disagree 1 6 People with high incomes should Much larger 14 16 pay a [...] share of their income Larger 62 6 in taxes than those with lower The same 23 22 incomes. Smaller 1 1 Much smaller Number of respondents 749 1,1 Source: ISSP (1992, 1999). Notes: Because of rounding, numbers do not always sum to 1. Neither = neither agree nor disagree.
Figure 8.1 U.S. Earned Income Tax Credit, 22 $5, $4, Married Couple with Two or More Children EITC $3, $2, Single Adult with One Child $1, Single Adult with No Children $ $ $5, $1, $15, $2, $25, $3, $35, Pretax Household Income Source: CBPP (22).
Figure 8.2 U.S. Social-Welfare Program Recipients, 1975 to 22 Persons (Percentage of Population) 2 EITC 15 1 Food Stamps 5 AFDC-TANF 1975 198 1985 199 1995 2 25 Sources: EITC CBPP (22); food stamps U.S. Department of Agriculture (23); AFDC-TANF U.S. Department of Health and Human Services (n.d.). Note: EITC figures are estimates (tax units multiplied by average household size).
Figure 8.3 Male and Female Employment in Sixteen Countries, 22 Percentage of Population Age Fifteen to Sixty-four 1 8 6 4 2 NW SWE DK FI SWI NL AUS GE FR BE IT Male Employment Female Employment US CN UK ASL JA
Figure 8.4 Male and Female Full-Time Employment in Sixteen Countries, 22 Percentage of Population Age Fifteen to Sixty-four 1 8 6 4 2 SWE FI DK NW FR AUS SWI IT BE GE Male Full-Time Employment Female Full-Time Employment NL US CN UK ASL JA