The making of inequality. Capital, labour and the distribution of incomeWP-EMS # 2015/07 (2015)
Inequality is a major problem of today’s capitalism. The rise of disparities in income and wealth has been documented by many studies, and this paper provides a concise and updated documentation of facts and trends in advanced countries, contributing to an interpretation of the sources and dynamics of inequality.
First, the evolution of relations between capital and labour is investigated, providing empirical evidence on the distribution of income between profits and wages. Second, the market processes that shape disparities of income – of individuals and households, before and after taxes, redistribution and public services – are addressed, showing the complexity of current trends. Third, disparities in wealth are examined, showing a much starker picture than that resulting from income inequality.
The explanation of these developments points to four ‘engines of inequality’ – the power of capital over labour, the rise of ‘oligarchs capitalism’, the individualisation of economic conditions, the retreat of politics – that are at the source of today’s inequalities. A full analysis of the dynamics of inequality, an interpretation of its mechanisms and a set of policy proposals to reverse it are developed in our book “Explaining inequality” (Franzini and Pianta, 2016).
Citation InformationMaurizio Franzini, Mario Pianta (2015) The making of inequality. Capital, labour and the distribution of income. University of Urbino Working Paper, WP-EMS 2015/07.