Making inclusive growth a reality - event with Joseph Stiglitz

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1. Making inclusive growth a reality: how to tackle the inequality crisis Professor Joseph Stiglitz,Columbia University Rain Newton Smith, Director of Economics,CBI…
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  • 1. Making inclusive growth a reality: how to tackle the inequality crisis Professor Joseph Stiglitz,Columbia University Rain Newton Smith, Director of Economics,CBI Caroline Spellman MP Liam Byrne MP Torsten Bell, Resolution Foundation #inequality / @resfoundation 1
  • 2. Fair shares? Making inclusive growth a reality: how to tackle the inequality crisis Torsten Bell March 2016 @TorstenBell 2
  • 3. The history: big change in inequality in the 1980s 3 • Gini coefficient rose 10 ppts in 1980s • Relatively constant in pre-crisis years. • On a downward trend post- crisis.
  • 4. The history: recent change driven by falls in earnings at the top 4 • Full-time earnings at 90th percentile fell by 8.4% between 2009 and 2012. • Between 2009 and 2015 earnings fell by £107 per week at the 90th percentile and £21 per week at the 10th percentile.
  • 5. The present: little change to inequality as incomes rise (slowly) across the distribution 5 • Strong income growth at bottom in recent years - NMW. • Low inflation has supported real incomes.
  • 6. The future: inequality forecast to rise in next 5 years 6 • Reductions in welfare generosity including freezing of benefit spending – lower incomes at the bottom • Forecast increases in earnings across the Parliament – higher incomes at the top
  • 7. The future: relative poverty forecast to rise in next 5 years 7 • Poverty rates have fallen over the last two decades, particularly among children. • By 2020 the child poverty rate is expected to return to its 1997 level, driven by reductions in generosity of welfare.
  • 8. The top 1%: share of income steadily growing 8 • RF analysis of HBAI shows that gross income share of top 1% has risen from 7.4% in mid- 1990s to 11% in 2011-2014. • Smaller rise and lower level using net income: 5.7% to 7.7%
  • 9. The top 1%: latest tax return data suggests return to income growth 9 • Top 1% individual income increasing 3.6% in 2013/14. • First notable increase since the crisis.
  • 10. International perspective: high UK market income inequality 10 • UK market income inequality is high among developed economies.
  • 11. International perspective: high UK market income inequality, offset by typical level of redistribution 11 • UK market income inequality is high among developed economies. • UK income inequality reduced by 1/3rd as a result of redistribution – from 0.52 to 0.34
  • 12. International perspective: global inequality is falling 12 • Global middle (p40-60) saw income growth of over 70% between 1988 and 2008 – China. • Stagnation across developed economies (p80-90). • Top racing away – over ½ of absolute increase in income to top 5%.
  • 13. Fair shares? Making inclusive growth a reality: how to tackle the inequality crisis Torsten Bell March 2016 @TorstenBell 13
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