We were discussing the causes of ‘market inequality’ in class today. Amongst other things, we discussed the importance of skill-biased technological change. This led some people to wonder what the comparative data looks like on higher education enrolment across countries. If there is rising demand for skilled workers, have some countries been better at meeting this demand than others?

I wondered, and so went to the Eurostat web site. From the ‘Population and social conditions’ theme, I got hold of what seems like a reasonable proxy for university enrolment figures from the ‘Education and training’ section, and then figures for the number of people in the 20-24 age cohort for each country. Taking the ratio of the two, multiplied by 100, I then calculate an (approximate) enrolment rate for each country.

Without further comment on the reliability of the calculations or what the appropriate inferences are, I offer, below, the plots for these data for the countries that seem to be of most direct interest for the class. (No population data available for the USA from Eurostat, I’m afraid. I’m sure it’s available elsewhere, but I’m not going to look for it.)

If you would like to look at the original data and/or see the Stata code that merges it and then generates the plot, try the following: pop2024.csv, unienrol.csv, and highereducation.do.

In case the library is getting you down but you still want to think about the politics of inequality, some podcasts:

• BBC Analysis programme on “Profits before pay” (mp3 from 20 February 12). Includes discussions of inequality trends and their economic and political causes.
• BBC Analysis programme on “Capitalists against the Super Rich” (mp3 from 23 January 12). Includes discussions of political responses to the financial crisis and inequality.
• BBC Analysis programme on “Neue Labour” (mp3 from 2 March 12). Includes discussion of how different patterns of training and employment have implications for inequality and industry.
• There are actually lots of interesting BBC Analysis programmes.
• This American Life episode 459 on “What Kind of Country?“. Includes interesting story on a Colorado town’s refusal to pay (more) taxes.

• Chris Dillow on “Inequality and the crisis“
• Kemal Dervis on “The Inequality Trap” in a macroeconomic sense.
• Sebastian Mallaby on how “Inequality may lead to rage against the machines” – skill-biased technological change against anyone who can’t make or program a computer?
• Robert Frank arguing that “The Prestige Chase Is Raising College Costs“
• James Kwak asking “Who’s a freeloader?“, and contrasting Tea Party logic and welfare-as-insurance in the process.

This is the updated reading list for the final class of PO4730.

4.9 Inequality and the Financial Crisis

For this final topic, we will look at the relationships between economic inequality and the financial crisis that has unfolded since around 2007/2008. The sovereign debt crises that have emerged from the original private sector financial problems have had large impacts on public expenditure — and so redistributive programmes. However, it has also been argued that inequality itself was an important cause of the original financial crisis in the USA. We will examine these issues. N.B. Readings may be updated at a later date for this topic as scholarly work in this field is still emerging.

Shorter/Popular Readings (Required)

• The Economist (2011). The beautiful and the damned. January 20th.
• The Economist (2010e). What’s income inequality got to do with it?. Democracy in America Blog. August 26th.
• The Economist (2010c). How inequality fueled the crisis. Free Exchange Blog. August 26th.
• The Economist (2010a). How egalitarian policy fueled the crisis. Democracy in America Blog. August 26th.
• The Economist (2010b). How exactly did inequality fuel the crisis?. Democracy in America Blog. August 27th.

Required Readings

• Rajan, Raghuram G. (2010). Fault Lines: How Hidden Fractures Still Threaten the World Economy. Princeton University Press, Princeton, NJ, Introduction and Chapter 1
• Krugman, Paul and Wells, Robin (2010a). The Slump Goes On: Why? New York Review of Books.
• Krugman, Paul and Wells, Robin (2010b). The Way Out of the Slump. New York Review of Books.
• Atkinson, A. B. and Morelli, Salvatore (2011). Economic Crises and Inequality. Paper prepared for the 2011 Human Development Report, funded by the United Nations Development Programme.

Further Readings

• Honohan, Patrick (2009). What Went Wrong in Ireland? Paper prepared for the World Bank.
• Bordo, Michael D. and Meissner, Christopher M. (2012). Does Inequality Lead to a Financial Crisis? NBER Working Paper 17896.
• This American Life (2009a). Episode 375: Bad Bank. WBEZ Radio.
• This American Life (2009b). Episode 382: The Watchmen. WBEZ Radio.
• This American Life (2009c). Episode 390: Return to the Giant Pool of Money. WBEZ Radio.
• This American Life (2010). Episode 418: Toxie. WBEZ Radio.
• * Mian, Atif, Sufi, Amir, and Trebbi, Francesco (2010). The Political Economy of the Sub-prime Mortgage Credit Expansion. NBER Working Paper No. 16107.

A timely post for PO4730 students by Lucy Barnes.

How is it possible that American taxes be progressive, while achieving so little redistribution? The answer is that redistribution is not driven primarily by the structure of taxation, but by its level.

More at her Monkey Cage post.

• Chris Dillow on “Big Government and Inequality”.
• Chris Dillow on “Unions vs Legislation” as alternative avenues for the Left.
• Lane Kenworthy on “How rich countries lift up the poor”.
• Lane Kenworthy on “Inequality, mobility, opportunity”