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Title:A call for comparative research: Consequences of a rising income inequality for state activities PDF Logo
Authors:Neubäumer, Renate
Issue Date:2011
Series/Report no.:Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5651
Abstract:The aim of this discussion paper is not only to activate a debate over the interrelation between rising income inequality and economic policy measures but also to initiate comparative research in several European countries and North America. It discusses the consequences of a rising income inequality and its implications for state activities and economic policy. Using a simple model it becomes evident that an increasing income inequality leads to higher government spending, as a share of Gross Domestic Product, though the state does not take over more responsibilities. It also leads to a higher tax share though rates of taxation are not increased. This forces economic politicians to act. If they want to prevent an increase of these shares in order not to fall behind in the international competition, they must accept a rising public debt and/or must move away from socially accepted value judgments about social standards, the degree of redistribution by taxes and/or an adequate supply of public goods. This might result in disenchantment with politics.
Subjects:economic policy
income inequality
macroeconomic key figures
state activities
JEL:E6
Persistent Identifier of the first edition:urn:nbn:de:101:1-201104213140
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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