Friday, 13 January 2017

... but some are more equal than others.

Putting their usual left/right spin on the same press release.

The BBC:

New research by the Institute for Fiscal Studies has found that one in five low-paid men aged 25 to 55 now work part-time.

While 95% of top-earning men normally work full-time, 20% of the lowest paid now work part-time. That means wage inequality for men has risen over two decades, but for women the opposite is the case.

City AM:

Inequality in net household incomes has declined over the last 20 years according to a new report from the Institute for Fiscal Studies – the second set of figures this week to reveal a narrowing gap between Brits at the top and bottom of the scale.

Published this morning, the IFS numbers record household incomes calculated after benefits and taxes, and reveal steadily falling inequality.

The key to this is the weasel wording in the seoond paragraph, "after benefits and taxes".


paulc156 said...

There's two things I would emphasise. Firstly I think there's a strong case that pre tax inequality [even if significantly reduced by redistribution through the tax and benefit system] is itself a concern [plenty of arguments as to why] if 'that' inequality is great and/or rising quickly. It rose rapidly from the 80's until the turn of the century and is much greater today than in the entire post war period up to the late 70's.

Secondly. as the article points out [both the City AM report and IFS work] the top 1% have continued to see the gap between their earnings and everyone else's widen even after tax and benefits are taken into account.

Mark Wadsworth said...

PC, for once we are in agreement.

paulc156 said...

MW. Jesus H Christ! [only kidding]

Jonathan Bagley said...

Because of tax credits, the marginal tax rate for a man in a two adult, two children family, earning between 10K and 20K, is over 70% and as high as 77%. Why work an extra hour for two pounds? Also, I'm guessing various other benefits are lost on the journey from 10K to 20K.

Mark Wadsworth said...

JB, exactly, those stupid marginal rates increase gross inequality while reducing net inequality.

Dinero said...

"those stupid marginal rates increase gross inequality while reducing net inequality."

possibly that is inevitable if you think that persons in a negotiation of pay take benefits and taxes into consideration when claculating thier requirements.

Mark Wadsworth said...

Din, yes, that's sort of what JB said. Work-related benefits push down wages/subsidise low wage payers - unemployment benefit with a high withdrawal rate pushes up wages/hurt low wage employers. Both have other ill effects. A UBI is non-distortionary in either direction and hence far preferable on that score.