Multidimensional Inequalities

International Perspectives Across Welfare States

Bent Greve

• Publisher: De Gruyter
• Year: 2021
• ISBN:
  9783110714371
• Edition: 1
• Topic: Social Sciences
• Subtopic: Social Theory
• Index: Social Sciences

Multidimensional Inequalities is a deep dive into the historical contexts and contemporary realities that negatively influence society and its structures. It is often overlooked that inequality is not just about income and wealth but rather a broad spectrum of intersecting factors. This book focuses on each aspect individually, analysing its effect on welfare systems, and informs about the instruments available to reduce inequality.

1 Why a book on inequality?

1.1 Introduction

Recent years have seen an increasing awareness of the possible impact of inequality on a number of aspects of societies’ development. The number of books and articles has also been increasing. This is, among other things, shown by the United Nations (UN) Social Development Goals,¹ of which three (1, 5, and 10) deal with poverty, gender equality, and reducing inequality. There is thereby also a growing need for well-researched knowledge on how to understand inequality, how it has an impact on societies’ development, and whether and how societies will be able, if they so wish, to reduce inequality. This includes the availability of possible policy instruments in order to cope with inequality in the most efficient and evidence-based way. In order to explain the contents of the book, this chapter will also include a short historical depiction of development in inequality since the Second World War. This illustrates the emphasis in different periods of time on that development, including that in which rising economic options were comparable with rising degrees of equality, and also helps to explain why inequality for a time was not on the agenda.

Inequality is no longer, as it often was in historic analysis, an issue of only income and wealth, including the distribution of income on the labour market and, after welfare states intervened, through income transfers as well as taxes and duties. As a consequence, this book will also be focused on a broader-based set of questions related to inequalities across a number of dimensions, which have often been systematically overlooked in the research, as they have been analysed separately and not in conjunction with other aspects of inequality. The book will present research on these different dimensions and document the size and possible impact hereof on societal development. By doing this, it will give a comprehensive overview of inequality, and at the same time indicate the variety of elements which have had an impact on the development in inequality in different kinds of welfare states. Thus, the overall research question that will be investigated in the book is: Can it be documented that, even on the assumption that inequality is multidimensional, it will be so in all areas and, further, be pursued in the same way across a variety of welfare states?

This will be done by explaining what has happened, briefly in terms of history, then focusing on how and whether the role of the different welfare states has changed, and whether there are new mechanisms and instruments to use, but also overall changes in the development and differences across welfare states. Variations of causes for inequality and how they intersect is a further central aspect of the book.

This book will analyse and discuss inequality from an interdisciplinary approach, focusing on political science, economics, and sociology, and furthermore link it to what is and has been done in different types of welfare states, and also analyse why it has not been the same in all countries. It thereby also follows a social policy approach in its analysis by going beyond one attempt to understand the concepts and possible explanations for the development. Thereby, the book encapsulates a number of issues; see more below in the short overview of the individual chapters. These issues will be a combined state of the art within the topics but add new analysis in order to be able to grasp the development in a comparative approach as this helps in understanding different factors’ possible impact on inequality.

The comparative approach will focus on countries from different welfare regimes, especially in Europe. For chapters on the different welfare regimes, see Greve (2019a), and on the development in welfare states in the different European countries, see Blum, Kuhlmann, and Schubert (2020). Typically, the book will use two countries from each of the regimes included (Nordic, Central, Liberal, Southern and Eastern Europe), but will in places also give data for all EU countries and –albeit to a more limited extent – also include a few US data. The countries used are Sweden, Denmark, Germany, France, the UK, Ireland, Italy, Spain, the Czech Republic, and Hungary. Lastly the book will discuss what we know will work if the intention is to do something about the level of different kinds of inequality. This is not in terms of very specific types of interventions, but a broader-based approach taking into account where one can see inequalities and possible reasons therefore.

1.2 Inequality – a multifaceted problem

Historically, inequality has always been high. Despite this, it has even been argued that the gap between corporate executive and average incomes now is higher than it was in 1688 between British baronets and labourers/paupers (Therborn 2012). In the West, following the many golden years of economic growth and in the role of welfare states after the Second World War and until the oil price crisis in the 1970s, economic inequality seemed to have been reduced, and thereby less of a societal problem, given that full equality each year has not been the goal (see more in Chapter 2). Thus, more people got more, and economic inequality was reduced in many countries. It continued until the mid-1980s, after which there has been a marked increase in inequality in many countries. There has also been a greater focus on those with the highest incomes; “the 1 %”, and their fortunes, especially following Piketty's book (Piketty 2014). There has been, at the same time, an increase in wealth inequality, which by itself can continue to increase inequalities by rising dividends to those already rich. The fact that inequalities in, for example, wages are “determined by inequality in access to education, labour market institutions, unions and minimum wage” (Piketty and Cantante 2018, 227), is also a reason why one needs to look into a number of issues to understand inequality.

One can use many and different data on inequality, which will also be done during the book. First, however, here are a few data indicating the long-term trends of economic inequality as an indication that there have been dramatic changes over the last 100 years. Figure 1.1 shows the pre-tax income for the 10 % with the highest share for a few selected countries from different welfare regimes.

Figure 1.1: 10 % highest income earners’ pre-tax income as % of total income 1915 – 2017. Source: https://wid.world/data/#countrytimeseries/sptinc_p90p100_z/GB/1918/2017/eu/k/p/yearly/s, accessed 11 June 2020.

As Figure 1.1 indicates, the development has to a large degree been more or less the same with the lowest level in the 1970s or early 1980s in all countries. The detail is not the important issue here, but more that after the Second World War many countries moved towards more equal societies also when looking only at the income before the welfare state’s intervention, implying a more equal outcome especially in the labour market. This is also an indicator that inequality is not given, and not impossible to change over time. There is not only inequality in income, but also, and even as a consequence, in wealth, so that the richest 85 people in the world have the wealth as the 50 % with lowest wealth (Sayer 2015).

A classic measure of economic inequality, returned to in Chapter 2, is the use of the Gini coefficient. Figure 1.2 shows the development in the Gini coefficient since 1995 after the impact of taxes and income transfers for a number of EU countries.

Figure 1.2: Development in Gini coefficient in selected EU countries since 2005. Note: For some years, especially before 2000, some data are missing; here the choice has been to choose the one year with data closest to it. Source: Eurostat, ilc_di2, accessed 27 August 2020.

Overall, there have been differences in the development in inequality since 1995, with the strongest increase in the Nordic countries, no changes in several other countries and even decline in the Czech Republic. Still, there are variations indicating that there is a role for the welfare state with regard to the level of, and development in, inequality. Figure 1.2. also indicates that inequality has increased in most countries after the financial crisis around 2009/2010.

Economic inequality is just one of a number of inequalities we see in modern societies. There is inequality in relation to gender, health, life-expectancy, education, public as well as private consumption, democratic participation, happiness, etc. There is often inequality between native population and migrants, between young and old, and many layers and variations also across geographical entities in different societies. Of course, a number of these work together so that, for example, getting an education can contribute to higher incomes and wealth later in life. Whether a distinction can be made between cause and effect and possible causal relationships in every detail might be difficult. Still, it is important to have knowledge of the extent of inequality (not just economic), its development and, as far as possible, explanatory factors that are central to understand the evolution in society. This also includes whether we can have both overlapping reasons for inequality, and also possible variations across the different types of inequality. The limitations of income and a unidimensional approach have been argued to imply that one needs also to look into categorical inequalities (Galbraith 2016b), which include issues such as race, gender, and nationality. Another way of describing this is what Therborn has labelled existential inequality, which he defines as “unequal allocation of personhood, i. e., of autonomy, dignity, degree of freedom, and of rights to respect and self-development” (Therborn 2013, 49), and which it is argued, in fact, to have moved towards a higher degree of equality. This is not to neglect that also within these fields there are still high degrees of inequality, which will be shown in this book.

The rising degree of inequality over the last 20 – 30 years has also raised the question of why the increases from the continued overall economic growth in most countries, even given the financial crisis, have not been felt equally by all in society (Causa, Hermansen, and Ruiz 2016).

Overall, inequality is often multidimensional, and the central research question is, as mentioned earlier, how and to what degree the different dimensions overlap and interact, but also how to analyse and investigate inequality by using not only monetary metrics as way of understanding the development. Therefore, non-monetary issues are also central for an understanding of inequality and its development.

There are differences in inequality in a number of parameters between separate types of welfare states. The difference in social stratification is one of the historical explanations for the splitting of countries into different types of welfare regimes (Esping-Andersen 1990). But that does not change the fact that it is surprising why this continues and why welfare states do not converge towards lesser inequality in a number of areas. There may be ideological reasons for this, but also a degree of path-dependency in the development.

Recent years have pointed to a number of negative consequences of inequality, such as low social trust, high levels of crime, and even bad health outcomes across the entire population from a variety of social science approaches to inequality analyses (R. Wilkinson and Pickett 2018; Dabla-Norris et al. 2015; Stiglitz 2012; Atkinson 2015). It might even have a negative impact on economic growth (Cingano 2014; Berg and Ostry 2011), and thus the supposed historical rade-off between equality and efficiency (Okun 1975) might no longer hold, although this might vary across countries. Besides wondering why, at a time when knowledge is central, these elements no longer permeate decisions can, of course, be explained by a different interpretation of data, the consequences of interaction and the possible policies available to cope with different types of inequality, as they also might influence other aspects of societal development. As concluded in one study: “High inequality may have several negative side effects: an increase in crime, political dysfunction, macroeconomic instability, worsening public health, and lower social mobility” (Dimick, Rueda, and Stegmueller 2018, 48). This is also confirmed in another study comparing New Zealand and Denmark (Richmond-Rakerd et al. 2020).

Multidimensionality applies in relation not only to these different explanations, but also the methods and factors used to try to capture inequality in societies. This includes the fact that a number of data and ways of calculating them can influence the understanding of inequality, to which we shall return in Chapter 2. To mention just two issues: one is whether inequality should be measured only using a monetary approach; another is whether there should be a stronger focus on those at the bottom of the distribution, and how changes in the middle of the distribution influence the chosen measure of inequality. Thereby, the study also focuses on broader issues of welfare, well-being, and happiness for individuals in societies, thereby indicating that GDP is not the only metric for societies’ development as well as economic inequality, but that a broader picture is important (Stiglitz, Fitoussi, and Durand 2019).

Through a series of comparative analyses, the book will discuss and examine the evolution of inequality within a number of fields. It uses an abundant number of international databases with different data and surveys to research into how inequality has developed and ways to explain this. The book will first discuss a number of theoretical and methodological issues; see also the overview later in this chapter. It includes the classic question of whether we can measure inequality – and, if so, what degrees of uncertainty there are. The classic discussions were and still are especially related to economic inequality (income as well as wealth). But given inequality in a number of areas, it is also necessary to investigate whether and how it can be measured and understood in a number of other areas. Not only measurement is important, but also whether we know the impact of different kinds of intervention.

The comparative approach will follow the classical welfare regime approaches (Esping-Andersen 1990), but include also more recent ones, for an overview of typologies and discussions hereof, see a number of chapters in Greve (2019a). The same will be the case when only a selected number of countries from the different regimes are included in the analysis, as a way of ensuring an overview of what actually takes place in countries with different welfare regimes and historical traditions.

Thus, overall, the book provides a state-of-the art ove...