Torsten Bell's slides from our event on inclusive growth with Prof Joseph Stiglitz.

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
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2. Fair shares?
Making inclusive growth a reality:
how to tackle the inequality crisis
Torsten Bell
March 2016
@TorstenBell
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3. The history: big change in inequality in the 1980s
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• 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
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• 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
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• 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
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• 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
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• 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
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• 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
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• Top 1%
individual
income
increasing
3.6% in
2013/14.
• First notable
increase
since the
crisis.

10. International perspective: high UK market income
inequality
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• UK market
income
inequality is
high among
developed
economies.

11. International perspective: high UK market income
inequality, offset by typical level of redistribution
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• 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
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• 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
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