Graf v dokumentu a pero REDISTRIBUTION, SOCIAL POLICY AND WELFARE V. 1. Distribution and justice ̶ Distribution of income and wealth has been a major concern throughout the history of economics ̶ ̶ Positive and normative economics is difficult to separate in this area. Two main views of justice in distribution: ̶ Commutative justice: each person should receive income in proportion to his contribution to the productive process ̶ Distributive justice: implies approximate equality in income distribution 3 Redistribution, social policy and welfare state Staré knihy sklizně na řádku Issues in distribution The are several specific areas of concern in the debate about distribution: ̶ The distribution of income between persons irrespective of the source of income ̶ The distribution of income between factors of production, in particular between labour and capital ̶ ̶ ̶ The distribution of earnings between different types of labour The distribution of wealth Poverty 4 Redistribution, social policy and welfare state Income distribution between people ̶ The conventional mean of illustrating income distribution is the Lorenz curve Lorenz curves in UK (1979, 2001) 5 Redistribution, social policy and welfare state Income distribution between people ̶ and the Gini coefficient. 6 Redistribution, social policy and welfare state Gini coefficient 7 Redistribution, social policy and welfare state The earnings distribution Median gross weekly wage (all occupations = 100) Occupational group Managers and senior officials Professional occupations 146 142 113 76 Associate professional and technical occupations Administrative and secretarial occupations Skilled trades occupations 93 Personal service occupations 67 Sales and customer service occupations Process, plant and machines operatives Elementary occupations 61 85 66 All occupations 100 Table: Relative earnings by occupational groups (UK) 8 Redistribution, social policy and welfare state The distribution of wealth Percentage of wealth owned by: Most wealthy 1 % of population Most wealthy 5 % of population Most wealthy 10 % of population Most wealthy 25 % of population 1971 31 1986 18 2006 21 52 36 40 65 50 54 87 73 77 Most wealthy 50 % of population 97 90 94 Table: Ownership of marketable wealth (UK) 9 Redistribution, social policy and welfare state Poverty 10 Redistribution, social policy and welfare state Extreme poverty (people living on less than $1.90 a day) 11 Redistribution, social policy and welfare state Extreme poverty (people living on less than $1.90 a day) 11 Redistribution, social policy and welfare state Extreme poverty (people living on less than $1.90 a day) 11 Redistribution, social policy and welfare state Extreme poverty (people living on less than $1.90 a day) 12 Redistribution, social policy and welfare state Obsah obrázku mapa Popis byl vytvořen automaticky Why is income inequality rising? ̶ ̶ ̶ Globalisation ̶ A key role for technology => replacement low-skilled workers by machines Labour vs. capital: a shifting balance ̶ Larger share of income belongs to capital owners Change in the workplace: ̶ Increase in part-time working ̶ Decline in trade union membership ̶ Changing in societies: ̶ Growing tendency to marry people very similar social and educational backgrounds 13 Redistribution, social policy and welfare state Labour share of national income in OECD countries (1990 and 2009) 14 Redistribution, social policy and welfare state Why is income inequality rising? 15 Redistribution, social policy and welfare state 2. Welfare state (WS) ̶ The WS is a concept of government in which the state plays a key role in the protection and promotion of the social and economic well-being of its citizens ̶ WS is funded through taxes and provides cash or in-kind transfers. ̶ In-kind transfers consist of goods or services, not money 16 Redistribution, social policy and welfare state Detailní záběr balíčku s prázdnou značkou Social protection expenditure and GDP per capita (US$) 17 Redistribution, social policy and welfare state Diversity of welfare states ̶ ̶ Differing welfare models evolved after WWII. Esping-Andersen (The Three Worlds of Welfare Capitalism, 1990) identified models of welfare state according to stratification and the different providers of welfare: a)Social-democratic (Scandinavian) model b)Corporatist (continental) model c)Liberal (Anglo-Saxon) model d)Southern model 18 Redistribution, social policy and welfare state a) Social-democratic (Scandinavian) model ̶ ̶ ̶ ̶ ̶ Prevalent in Denmark, Sweden, Norway Generous replacement of market earnings through the state (e.g. for unemployed) Social welfare is an universal right State as a main provider of social welfare Characterised by high social expenditure, active labour market policies and increased public-sector employment 19 Redistribution, social policy and welfare state b) Corporatist (continental) model ̶ ̶ Typified by Germany and France Main provider of welfare is the family, but contributory principle ties many benefits to employment history ̶ Basic security supplemented with contributory benefits (pensions, unemployment, etc.) 20 Redistribution, social policy and welfare state c) Liberal (Anglo-Saxon) model ̶ ̶ ̶ ̶ ̶ United Kingdom, Ireland Seeks to increase demand for labour through liberalization and wage flexibility Mostly private forms of insurance Benefits comparatively low and linked to means-testing Poverty relief through minimum wages, but less of a focus on equality. 21 Redistribution, social policy and welfare state d) Southern model ̶ ̶ ̶ ̶ Spain, Italy, Greece, Portugal Extended family as a core unit Income maintenance Strong jobs protection – favouring, for example, full-time over temporary 22 Redistribution, social policy and welfare state Challenges for welfare states ̶ ̶ ̶ Demographic change: population ageing and living longer increases financial burden Globalisation: reducing governments’ ability to sustain or reform welfare institutions Changes in a family structure (societal change): e.g. increase the participation rate of women, the shift away from the male-breadwinner model affects certain aspects of the welfare model ̶ ̶ Problem of welfare state and efficiency: especially administrative costs and the disincentive effects on the labour supply New technologies and the changing mix of jobs 23 Redistribution, social policy and welfare state Challenges for welfare states 24 Redistribution, social policy and welfare state 25 Redistribution, social policy and welfare state