History and Prospects of Inequality between Europeans.pdf

History and Prospects of Inequality between Europeans¤ Christian Morrisson, Fabrice Murtiny November 6, 2003 Abstract This article provides the …rst study of inequality and poverty in the European Union from 1970 to 2040. The distribution of disposable in- come shows a large decrease of absolute poverty over the last decades, whereas inequality has not changed since 1980 after a fall in the 70s. The comparison between the two distributions of disposable income and fac- tor income respectively, allows an estimate of redistribution: this becomes more important when factor inequality increases. The total inequality is decomposed between inequality within countries and inequality between countries. The latter accounts for a low and decreasing share of total inequality. Moreover, the study of the convergence processes of GDP per capita and inequality within countries allows, with population projections, to estimate the European distribution for the next 40 years with 27 coun- tries, an enlargement which will entail a large and persistant increase of inequality and of absolute poverty. The best index of the economic performance of the European Union is the rate of growth of GDP per capita. One could add to this index the weight of the Union in world trade, the rate of growth of total factor productivity since the latter reveals the quality of the governance and the impact of technology growth . But such indexes do not give informations on social aspects which concern Europeans as much as the rate of growth of GDP per capita. In a social and political perspective, the distribution of disposable income is a pertinent index because tensions in social relations are linked to inequality of d