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Disposable Income Inequality, Cohesion and Crisis in Europe

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Reducing Inequalities

Abstract

European inequality can be seen as inequality within and between Member States, regions and households. True Europe-wide inequality measures the inequality between all households of the European Union (EU). This inequality has been declining until 2008 due to stronger growth in poorer Member States. Since 2010 this progress has stagnated in the wake of the financial crisis, great recession and sovereign debt panic in the Euro area. Strong and rising inequality has contributed to these crises. Restoring growth and cohesion in Europe requires higher demand based on rising incomes of the poorer strata of the population.

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Notes

  1. 1.

    Income after taxes and social transfers.

  2. 2.

    The Theil index varies between 0 and N (with N the number of compared units).

  3. 3.

    See Goedemé et al. (2014) for an application on Europe.

  4. 4.

    For the latest, the sixth report of 2014 see: http://ec.europa.eu/regional_policy/sources/docoffic/official/reports/cohesion6/6cr_en.pdf

  5. 5.

    For a detailed analysis, see Dauderstädt (2014).

  6. 6.

    Calculation by the author using Eurostat data; see also Table 2.3.

  7. 7.

    For a more in-depth discussion of the influence of different metrics on multi-country inequality, see Nino-Zarazua et al. (2016).

  8. 8.

    Nomenclature for Territorial Units for Statistics (NUTS) is the EU classification of regions; NUTS-1 are big regions such as German ‘Länder’; NUTS-2 are smaller regions defined for regional policy measures.

  9. 9.

    Calculation by the author using Eurostat data.

  10. 10.

    See OECD (2011), OECD (2015), Kumhof and Ranciere (2010), Gupta (2014).

  11. 11.

    See OECD (2011); the OECD average is 0.1.

  12. 12.

    See also Atkinson et al. (2010), p. 109.

  13. 13.

    Today we would need 140 as Croatia has joined the EU as its 28th member state. In order to facilitate the comparison over time, we still use 135 (=5 × 27).

  14. 14.

    For a detailed explanation, see Dauderstädt (2008) or Dauderstädt and Keltek (2011).

  15. 15.

    Taken from Dauderstädt and Keltek (2015, 2016).

  16. 16.

    The figures might nevertheless not be fully comparable as data sources and methodologies of household surveys vary from country to country.

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Author information

Authors and Affiliations

  1. Friedrich Ebert Foundation, Bonn, Germany

    Michael Dauderstädt

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  1. Michael Dauderstädt
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Editors and Affiliations

  1. University of Lisbon, Portugal

    Renato Miguel Carmo

  2. Centre Maurice Halbwachs, Paris, France

    Cédric Rio

  3. TÁRKI, Social Research Institute and Institute for Sociology, CSS Hungarian Academy of Sciences, Budapest, Hungary

    Márton Medgyesi

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Dauderstädt, M. (2018). Disposable Income Inequality, Cohesion and Crisis in Europe. In: Carmo, R., Rio, C., Medgyesi, M. (eds) Reducing Inequalities. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-65006-7_2

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  • DOI: https://doi.org/10.1007/978-3-319-65006-7_2

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