The politics of helping the poor Lane Kenworthy June 2010 Economic - PowerPoint PPT Presentation

The politics of helping the poor Lane Kenworthy June 2010

Economic growth has been good for the poor ——————————————————————————— Denmark Sweden 13,000 13,000 P10 income (2000 US$ P10 income (2000 US$ per equivalent person) per equivalent person) Den04 Den00 Den95 Swe05 Den92 Den87 Swe00 Swe92 Swe95 Swe81 Swe87 4,000 4,000 0 1 0 1 GDP per capita GDP per capita

Economic growth has been good for the poor ——————————————————————————— Finland Norway 13,000 13,000 Nor04 P10 income (2000 US$ P10 income (2000 US$ per equivalent person) per equivalent person) Nor00 Fin04 Nor91 Nor95 Nor86 Fin91 Fin00 Fin95 Fin87 Nor79 4,000 4,000 0 1 0 1 GDP per capita GDP per capita

But not everywhere ——————————————————————————— Australia Canada 13,000 13,000 P10 income (2000 US$ P10 income (2000 US$ per equivalent person) per equivalent person) Can91 Can04 Can87 Can94 Can00 Can81 Asl03 Asl01 Asl81 Asl85 Asl89 Asl95 4,000 4,000 0 1 0 1 GDP per capita GDP per capita

Good only in the Nordic countries? ———————————————————————————

Good only in the Nordic countries? No ——————————————————————————— Austria Belgium 13,000 13,000 P10 income (2000 US$ P10 income (2000 US$ per equivalent person) per equivalent person) Aus04 Aus00 Bel00 Aus87 Aus94 Bel97 Bel92 Bel85 4,000 4,000 0 1 0 1 GDP per capita GDP per capita

Good only in the Nordic countries? No ——————————————————————————— France Netherlands 13,000 13,000 P10 income (2000 US$ P10 income (2000 US$ per equivalent person) per equivalent person) Nth99 Nth91 Nth94 Fr00 Fr94 Nth83 Nth87 Fr89 Fr81 Fr84 4,000 4,000 0 1 0 1 GDP per capita GDP per capita

Good only in the Nordic countries? No ——————————————————————————— Spain 13,000 P10 income (2000 US$ per equivalent person) Sp00 Sp04 Sp90 Sp95 4,000 Sp80 0 1 GDP per capita

Bad in all English-speaking nations? ———————————————————————————

Bad in all English-speaking nations? No ——————————————————————————— Ireland United Kingdom 13,000 13,000 P10 income (2000 US$ P10 income (2000 US$ per equivalent person) per equivalent person) UK04 UK99 Ire00 UK95 UK91 UK86 UK79 Ire95 Ire87 4,000 4,000 0 1 0 1 GDP per capita GDP per capita

Good in all continental countries? ———————————————————————————

Good in all continental countries? No ——————————————————————————— Germany Italy 13,000 13,000 P10 income (2000 US$ P10 income (2000 US$ per equivalent person) per equivalent person) Ger89 Ger00 Ger81 Ger04 Ger94 Ger84 It91 It04 It00 It86 It95 4,000 4,000 0 1 0 1 GDP per capita GDP per capita

Good in all continental countries? No ——————————————————————————— Switzerland 13,000 P10 income (2000 US$ per equivalent person) Swi04 Swi00 Swi82 Swi92 4,000 0 1 GDP per capita

The United States? ———————————————————————————

The United States? Only in the late 1990s ——————————————————————————— United States 13,000 P10 income (2000 US$ per equivalent person) US00 US04 US79 US94 US86 US91 4,000 0 1 GDP per capita

What accounts for this variation in "trickle down"? ——————————————————————————— Where economic growth has trickled down to the poor (households in the bottom income decile), it has done so mainly via government transfers rather than via earnings This is not surprising: in most rich nations 20-30% of households have no earnings Some affluent countries have increased transfers in line with per capita GDP; others have not

Successful trickle down ——————————————————————————— Sweden 7,500 per equivalized person) Average (2000 US$ 5,000 2,500 0 1980 1990 2000 Year  net government transfers; ○ earnings; + other market income Note : averages for bottom-income-decile households

Successful trickle down ——————————————————————————— Denmark 7,500 per equivalized person) Average (2000 US$ 5,000 2,500 0 1980 1990 2000 Year  net government transfers; ○ earnings; + other market income Note : averages for bottom-income-decile households

Successful trickle down ——————————————————————————— United Kingdom 7,500 per equivalized person) Average (2000 US$ 5,000 2,500 0 1980 1990 2000 Year  net government transfers; ○ earnings; + other market income Note : averages for bottom-income-decile households

Successful trickle down ——————————————————————————— Ireland 7,500 per equivalized person) Average (2000 US$ 5,000 2,500 0 1980 1990 2000 Year  net government transfers; ○ earnings; + other market income Note : averages for bottom-income-decile households

Successful trickle down ——————————————————————————— Finland 7,500 per equivalized person) Average (2000 US$ 5,000 2,500 0 1980 1990 2000 Year  net government transfers; ○ earnings; + other market income Note : averages for bottom-income-decile households

Little or no trickle down ——————————————————————————— United States 7,500 per equivalized person) Average (2000 US$ 5,000 2,500 0 1980 1990 2000 Year  net government transfers; ○ earnings; + other market income Note : averages for bottom-income-decile households

Little or no trickle down ——————————————————————————— Germany 7,500 per equivalized person) Average (2000 US$ 5,000 2,500 0 1980 1990 2000 Year  net government transfers; ○ earnings; + other market income Note : averages for bottom-income-decile households

Little or no trickle down ——————————————————————————— Canada 7,500 per equivalized person) Average (2000 US$ 5,000 2,500 0 1980 1990 2000 Year  net government transfers; ○ earnings; + other market income Note : averages for bottom-income-decile households

Little or no trickle down ——————————————————————————— Australia 7,500 per equivalized person) Average (2000 US$ 5,000 2,500 0 1980 1990 2000 Year  net government transfers; ○ earnings; + other market income Note : averages for bottom-income-decile households

Successful trickle down ——————————————————————————— Norway 7,500 per equivalized person) Average (2000 US$ 5,000 2,500 0 1980 1990 2000 Year  net government transfers; ○ earnings; + other market income Note : averages for bottom-income-decile households

Successful trickle down ——————————————————————————— Netherlands 7,500 per equivalized person) Average (2000 US$ 5,000 2,500 0 1980 1990 2000 Year  net government transfers; ○ earnings; + other market income Note : averages for bottom-income-decile households

How can unsuccessful countries do better? ——————————————————————————— Advances in real incomes for low-end households hinge on government efforts to pass on the fruits of economic growth How to get from here to there I'll focus on the United States

The message from social scientists' study of social policy generosity ——————————————————————————— Structures and institutions rule Generous social policy is a function of Strong labor and left parties Proportional representation Few veto points Corporatist concertation Heavy trade Declines in agricultural and manufacturing employment

But this research has identified tendencies, not necessary conditions ——————————————————————————— There are plenty of exceptions Generous social policies favored by center-right Christian Democratic parties Extensive government support for child care and early education in continental France and Belgium Employment-conditional earnings subsidies adopted in diverse institutional settings and by parties all over the partisan map Social policy retrenchment by left governments