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REDUCING
INEQUALITIES
A Challenge for the
European Union?
Edited by
Renato Miguel Carmo,
Cédric Rio and
Márton Medgyesi
Reducing Inequalities
Edited by
Renato Miguel Carmo • Cédric Rio
Márton Medgyesi
Reducing Inequalities
A Challenge for the European Union?
Editors
Renato Miguel Carmo Cédric Rio
University of Lisbon Centre Maurice Halbwachs
Portugal Paris, France
Márton Medgyesi
TÁRKI, Social Research Institute and
Institute for Sociology
CSS Hungarian Academy of Sciences
Budapest, Hungary
ISBN 978-3-319-65005-0 ISBN 978-3-319-65006-7 (eBook)

https://doi.org/10.1007/978-3-319-65006-7
Library of Congress Control Number: 2017962339
© The Editor(s) (if applicable) and The Author(s) 2018

This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether
the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of
illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and
transmission or information storage and retrieval, electronic adaptation, computer software, or by similar
or dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or
the editors give a warranty, express or implied, with respect to the material contained herein or for any
errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional
claims in published maps and institutional affiliations.
Cover design by Tjaša Krivec
Printed on acid-free paper
This Palgrave Macmillan imprint is published by Springer Nature

The registered company is Springer International Publishing AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Contents
1 Introduction 1
Renato Miguel Carmo, Cédric Rio, and Márton Medgyesi
Part I Inequality and Poverty in European Union 11
2 Disposable Income Inequality, Cohesion

and Crisis in Europe 13
Michael Dauderstädt
3 Drivers of Growing Income Inequalities in OECD

and European Countries 31
Guillaume Cohen and Maxime Ladaique
4 Unemployment, Precariousness and Poverty

as Drivers of Social Inequality: The Case of the
Southern European Countries 45
Renato Miguel Carmo and Ana Rita Matias
v
vi Contents
5 Distributional and Categorical Inequalities in Europe:

Structural Configurations 63
António Firmino da Costa, Rosário Mauritti, Susana da
Cruz Martins, Nuno Nunes, and Ana Lúcia Romão
6 Income Poverty in the EU: What Do We

Actually Measure? Empirical Evidence on Choices,
Underlying Assumptions and Implications
(Based on EU-SILC 2005–2014) 75
Orsolya Lelkes and Katrin Gasior
7 Poverty and Social Exclusion Indicators

in the European Union: The Role of Non-Monetary
Deprivation Indicators 97
Brian Nolan and Christopher T. Whelan
8 Inequality of Outcomes and Opportunities

Among the Young 115
Márton Medgyesi
Part II European Union against Inequality 135
9 The European Union Social Tools in Question 137

Cédric Rio
10 European Union Policy on Gender Equality:

The Scope and Limits of Equality in the Single Market 149
Gwenaëlle Perrier
11 European Union and Human Rights: Reducing

Inequalities and Asymmetries in the Context of the
Economic Crisis 161
Beatriz Tomás Mallén
Contents
vii
12 Normative Arguments for a European Social Union 187

Antoon Vandevelde
13 Hayek’s Trap and the European Utopia We Need 213

Philippe Van Parijs
14 Wealth, Taxation and Inequality 225

Thomas Piketty and Frederico Cantante
15 Conclusion: Back to the Future – Towards a European

Social Agenda 241
Renato Miguel Carmo, Cédric Rio, and Márton Medgyesi
Index 249
List of Figures
Fig. 2.1 Development of inequality in the EU (2005–2015).

Source: Eurostat, authors’ calculations 19
Fig. 3.1 Level of income inequality, 2013 or latest year.
Source: OECD Income Distribution Database
(http://oe.cd/idd). Note: non-OECD EU countries
are shown in light blue. *The statistical data for Israel
are supplied by and under the responsibility of the relevant
Israeli authorities. The use of such data by the OECD
is without prejudice to the status of the Golan Heights,
East Jerusalem and Israeli settlements in the
West Bank under the terms of international law 33
Fig. 3.2 Trends in income inequality, Gini coefficient.
Source: OECD Income Distribution Database
(http://oe.cd/idd)34
Fig. 3.3 Employment growth 1995–2013, by type of employment.
Source: OECD (2015), In It Together: Why Less Inequality
Benefits All. Note: Working-age (15–64) workers, excluding
employers as well as students working part-time.
Non-standard workers include workers
with a temporary contract, part-timers
and own-account self-employed 37
ix
x List of Figures
Fig. 3.4 Trends in redistribution. Source: OECD Income

Distribution Database (http://oe.cd/idd).
Note: Redistribution is measured as the percentage
difference between inequality (Gini coefficient)
of gross market income (before taxes and transfers)
and inequality of disposable income (after taxes and transfers) 40
Fig. 4.1 Spatial clustering of income inequality among European
Union countries, measured by S80/S20 and the
Gini coefficient (2014). Legend: BE (Belgium);
BG (Bulgaria); CZ (Czech Republic); DK (Denmark);
DE (Germany); EE (Estonia); EL (Greece); ES (Spain);
FR (France); HR (Croatia); IT (Italy); CY (Cyprus);
LV (Latvia); LT (Lithuania); LU (Luxembourg);
HU (Hungary); MT (Malta); NL (Netherlands);
AT (Austria); PL (Poland); PT (Portugal); RO (Romania);
SI (Slovenia); SK (Slovakia); FI (Finland); SE (Sweden);
UK (United Kingdom). Source: Eurostat, EU-SILC, 2016.
Note: Data for Ireland not available 48
Fig. 4.2 People at risk of poverty or social exclusion and S80/S20
ratios, EU-28 (2014). Legend: BE (Belgium); BG (Bulgaria);
CZ (Czech Republic); DK (Denmark); DE (Germany);
EE (Estonia); EL (Greece); ES (Spain); FR (France);
HR (Croatia); IT (Italy); CY (Cyprus); LV (Latvia);
LT (Lithuania); LU (Luxembourg); HU (Hungary);
MT (Malta); NL (Netherlands); AT (Austria);
PL (Poland); PT (Portugal); RO (Romania);
SI (Slovenia); SK (Slovakia); FI (Finland);
SE (Sweden); UK (United Kingdom).
Source: Eurostat, EU-SILC, 2016.
Note: Data for Ireland not available 50
Fig. 4.3 Risk of poverty or social exclusion (%), in Greece,
Spain, Portugal and EU27, between 2005 and 2015.
Source: Eurostat, EU-SILC, 2016 50
Fig. 4.4 Households’ ability to make ends meet (from great
difficulty to very easily) (%), in some European
countries (2015). Source: Eurostat, EU-SILC, 2016.
Note: The values presented concerning ‘Inability to make
ends meet’ are the sum of percentage of the categories:
List of Figures
xi
‘Households making ends meet with great difficulty’

and ‘Households making ends meet with difficulty’ 51
Fig. 4.5 Average rating of financial satisfaction (0—Very low
satisfaction; 10—Very high satisfaction) by first and
fifth income quintiles, in EU-28 countries (2013).
Source: Eurostat, EU-SILC, 2013, ad hoc module well-being 52
Fig. 4.6 Evolution of the employment and unemployment rate
(15–64 years), 2000, 2008, 2015. Source: EU Labour
Force Survey (Eurostat) 53
Fig. 4.7 Evolution of the youth unemployment rate and
long-term unemployment (2000–2015).
Source: EU Labour Force Survey (Eurostat) 55
Fig. 4.8 Evolution of the percentage of employees with temporary
and involuntary temporary contracts (2000–2015).
Source: EU Labour Force Survey (Eurostat).
Note: Involuntary temporary contracts correspond
to the percentage of respondents that could not
find permanent job 56
Fig. 4.9 Involuntary part-time work (15–64 years)
and income inequality (S80/S20), EU-28.
Source: Eurostat. Note: Involuntary part-time
employment as percentage of the total part-time
employment, from ages 15 to 64 57
Fig. 4.10 Trends in involuntary part-time work, by age group,
in the southern countries and EU-28, in 2000, 2008
and 2015. Source: Eurostat. Note: Involuntary
part-time employment as percentage of the total
part-time employment 58
Fig. 6.1 Estimating poverty rates with margins of error.
Source: European Commission, Eurostat, cross
sectional EU-SILC 2014 UDB August 2016.
Note: Proportion of population at risk of poverty
across the EU, 2013 income year and confidence
intervals. 95% confidence interval for each country
(meaning that there is a 95% probability of the true
figure being within the calculated range) 79
Fig. 6.2 Poverty threshold differs substantially across the EU.
Source: European Commission, Eurostat, cross sectional
xii List of Figures
EU-SILC 2014 UDB August 2016.

Note: Monetary value of the at-risk-of-poverty threshold
for households of two adults with two children under
14, in EUR and PPS, 2013 income year 80
Fig. 6.3 Risk of poverty based on different thresholds.
Source: European Commission, Eurostat, cross
sectional EU-SILC 2014 UDB August 2016.
Note: At-risk-of-poverty rate gap and relationship
with the at-risk-of-poverty rate, 2013 income year 82
Fig. 6.4 The relationship of poverty risk and poverty gap.
Source: European Commission, Eurostat, cross sectional
EU-SILC 2014 UDB August 2016. Note: At-risk-of-poverty
gap and relationship with the at-risk-of-poverty rate,
2013 income year 83
Fig. 6.5 Comparing trends of the anchored and the standard poverty
risk. Countries with a relatively low ‘standard’ poverty risk
in 2013 (9%–15%). Source: European Commission,
Eurostat, cross sectional EU-SILC 2005–2014.
Note: Change in the at-risk-of-poverty
rate anchored in income year 2004 and the
at-risk-of-poverty rate, 2004–2013 income year.
The indicator ‘anchored in the income year 2004’
is defined as the percentage of the population
whose equivalised disposable income is below the
‘at-risk-of-poverty threshold’ calculated in relation
to the base year 2004 and then adjusted for inflation.
Data for anchored at-risk-of-poverty rates for Bulgaria,
France 2007–2009, Romania and Croatia is not available.
Break in series: Austria 2007, Spain 2008,
United Kingdom 2012 86
Fig. 6.6 At-risk-of-poverty rate among migrants, by region of origin,
2013 income year. Source: European Commission,
Eurostat, cross sectional EU-SILC 2014 UDB August
2016. Note: Grey bars show at-risk-of-poverty rates for
the total population. Estimates are based on a low number
of observations (20–49) in Bulgaria for non-EU migrants.
Estimates for Romania (EU and non-EU), Bulgaria (for EU)
and Slovakia (for non-EU) are omitted due to a very low
number of observations (<20) 91
List of Figures
xiii
Fig. 7.1 Elements of the EU poverty and social exclusion target

by country for EU-SILC 2014. Source: Eurostat,
2014 SILC data, ilc_pees01 extracted on 15/10/2016 105
Fig. 8.1 Young people neither in employment nor in education
and training (NEET rates), 15–29 years old (%).
Source: Eurostat database, edat_lfse_20 table,
extracted on 02/05/2016 117
Fig. 8.2 Evolution of the unemployment rate in different
age groups (percentage point change, 2008–2014).
Source: Eurostat database, lfsa_urgaed table, extracted
on 07/03/2016 118
Fig. 8.3 Change in prevalence of temporary work among those
in employment (percentage point change, 2008–2014).
Source: Eurostat database, lfsa_etpga table, extracted on
08/03/2016119
Fig. 8.4 Change in involuntary part-time work among those
working part-time (percentage point change, 2008–2014).
Source: Eurostat database, lfsa_eppgai table, extracted
on 12/09/2016 120
Fig. 8.5 Relative income poverty among the 15–29 age group.
Source: Own calculation based on EU-SILC UDB 2009,
2011, 2013. Note: poverty threshold is 60% of median
equivalised household income 122
Fig. 8.6 The association index (odds ratio) of being low educated
when having low-educated parents compared
to high-educated parents, 25–59 age group, 2011.
Source: Grundiza and Lopez Vilaplana (2013) 125
List of Tables
Table 2.1 Level and change in per capita income at purchasing

power parities 17
Table 2.2a The poorest (dark grey) and richest (light grey)
quintiles in the EU (euros) (2015) 21
Table 2.2b The poorest (dark grey) and richest (light grey)
quintiles in the EU (PPP) (2015) 22
Table 2.3 Different measures of European-wide inequality
(quintile ratios) 23
Table 5.1 Income by European country in PPS and euros,
age group 25–64, 2012 (national averages) 66
Table 5.2 European income deciles in PPS, age group 25–64,
2012 (brackets and averages) 67
Table 5.3 European income deciles by social class and country,
age group 25–64, 2012 69
Table 5.4 Educational inequalities in Europe by social class
and country, age group 25–64, 2012
(average years of schooling completed) 70
xv
1
Introduction
Renato Miguel Carmo, Cédric Rio,
and Márton Medgyesi
Inequality is a major issue today in public debates, especially since 2008

and the beginning of the financial, economic and social crises. In the
European Union (EU), the crisis exacerbates a tendency observed since
the 2000s: income inequality is growing in most countries, including in
Northern European states, which are recognised as the most egalitarian
societies in the world (OECD 2011, 2015).
Public and academic debates on inequality in the EU, like elsewhere in
the world, are mostly focused on national territories. This can simply be
explained by the fact that social issues have traditionally been linked to
the nation state: the development and acceptance of social solidarity
R.M. Carmo (*)

Centre for Research and Studies in Sociology (CIES), University Institute of
Lisbon (ISCTE-IUL), Lisbon, Portugal
C. Rio
Centre Maurice Halbwachs (CMH), Paris, France
M. Medgyesi
TÁRKI, Social Research Institute and Institute for Sociology,
CSS Hungarian Academy of Sciences, Budapest, Hungary
© The Author(s) 2018 1

R.M. Carmo et al. (eds.), Reducing Inequalities,
https://doi.org/10.1007/978-3-319-65006-7_1
2 R.M. Carmo et al.
within a community are strongly linked to the development and the

acceptance of a national state. Today, we see significant data regarding
inequality in the richest countries, including most of Europe. Some con-
tributions provide insight as to why nation states must limit socioeco-
nomic inequalities (Wilkinson and Pickett 2009; Stiglitz 2012), propose
explanations of the phenomenon (Milanovic 2011; Piketty 2014) or
develop economic and political propositions to limit it (Atkinson 2015).
The aim of this book is to develop a multiscalar approach with a focus on
inequality in the EU within and between countries, and in some contribu-
tions, comparisons with other European and Organisation for Economic
Co-operation and Development (OECD) countries. The book is concerned
with both vertical inequality, that is, inequality between those with high
incomes and low incomes, and horizontal inequality, that is to say inequality
between groups by nationality, age, ethnicity or gender. Our objective is
twofold. Firstly, the book describes the social situation in the EU with a
focus on inequality in a multidimensional approach, which permits com-
parisons between national populations. Inequalities are discussed through
different perspectives and indicators such as income and economic inequali-
ties, poverty and social exclusion, categorical inequalities and social classes
and educational inequalities.1 Secondly, it proposes political and prospective
analyses about the role of the EU institutions in the social domain, and with
regard to social and gender inequality. In the first part of this introduction,
we explain why we decided to edit a collective book focused on inequality at
the EU level. We present the different contributions in a second part.
Since the beginning of the European project, the institutions of the
European Economic Community and then of the EU have had access to
an ever-increasing number of tools in the field of social issues. According
to Falkner (2010), European institutions play a social role through three
general dimensions. There is firstly a regulatory role through social direc-
tives concerning working conditions, especially regarding health and
safety, and equal treatment (wage equality between men and women, for
example). The Treaty of Amsterdam (1996) gave the Commission the
ability to expand this regulatory role to all European citizens, and not
only to workers. Secondly, the regional policy, with its structural
funds—European Social Fund, Cohesion Fund and European Regional
Development Fund (ERDF)—provides a distributive role to the
Introduction 3
European Commission. Finally, this last institution has incentive tools

with the open method of coordination, and more recently the European
Semester, which, among other effects, leads Member States to pursue
common social objectives. It seemed possible at least, particularly during
Jacques Delors’ term as the president of European Commission, to apply
the idea of Social Europe in the real world, with EU institutions playing
a major role in the social field, including limiting social inequalities
among European populations, and then to observe the development of
solidarity in the EU territory.
The situation has changed at least since the beginning of the crisis.
While the EU’s prerogatives in the social domain are the same, the trend
appears negative now, to the extent that many specialists claim that the
idea, the cosmopolitan dream of Social Europe, is dead (Crespy and
Menz 2015; Lechevalier and Wielgohs 2015). This claim is based on
many signs. Firstly, after a period of socioeconomic convergence between
European countries, in part thanks to the cohesion policy, since the crisis
we can observe a stagnation of socioeconomic disparities. Secondly, and
maybe more fundamentally, the period seems quite unfavourable to the
development of strong solidarity among European people. Before the cri-
sis, Maurizio Ferrera claimed that there is ‘a tension, an uneasiness in
linking or reconciling “solidarity” with “Europe”’ (2005). The situation
may be growing worse: both the EU and a certain idea of solidarity are
currently being called into questioned like never before. With the grow-
ing importance of the European Council, we observe a return to national
interests conflicting with European interests once states are inside the EU
project: this can be illustrated not only by ‘Brexit’, but also by the persis-
tent political divergence between Member States regarding the situation
in Greece or the reception of refugees and other migrants. In parallel,
national social systems are slowly being dismantled in all European coun-
tries, especially in the name of reduction of public debts.
Why then a book focused on European inequality now? Despite the
current situation, discussing social issues at the EU level makes sense for
at least two reasons. On the one hand, the different contributions to the
book demonstrate that the EU has still a real role in the social field and
against inequality, even if this role is currently declining. On the other
hand, we strongly believe that the EU should play a more pronounced
4 R.M. Carmo et al.
role in social issues in the future. In addition to the heterogeneity of the

social situations in the different EU countries, all the national societies
face complementary difficulties, especially with the crisis: the rise of pub-
lic debt and difficulties financing and preserving social security schemes,
a rise in unemployment and precarious jobs, and then the risk of social
exclusion and poverty. The EU can help its members find an answer to
those shared social difficulties.
It is our role as social scientists to discuss these problems. We began
this work with the creation of a European network named Inequality
Watch a few years ago, by bringing together European research centres
and civil associations focused on inequality at the national level. By gath-
ering the contributions of recognised specialists of socioeconomic
inequality and European processes from distinct scientific disciplines and
several European countries, our desire with this book is to reconcile the
analysis of social processes with an accurate assessment of public policies
affecting vulnerable populations and regional discrepancies in the
EU. While the first part of the book highlights the social situation in the
EU in line with the consequences of the financial crisis, the second part
addresses the role of the EU and its institutions to cope with this chal-
lenge. Despite the social and cultural heterogeneity of EU Member States,
the first part shows that most populations and their institutions witness a
similar phenomenon of growing inequality. It could reinforce the idea of
an ambitious Social Europe able to limit inequality, or at least help its
Member States do so. The goal of the second part is specifically to discuss
the social tools already in use at the EU level and their limits, but also to
reflect on the legitimacy of such an idea. Our aim is not to describe or
explain the recent developments of Social Europe but to think theoreti-
cally and ethically about the current and future role of the EU in the
social field and more specifically in the fight against inequality. How does
the EU deal with inequality today? What should be the role of EU insti-
tutions regarding the challenge of reducing inequality?
The theoretical advances regarding inequality have been both signifi-
cant and varied and have opened up renewed forms of understanding and
explanation. The most important theories and analyses of contemporary
social inequalities adopt a multidimensional perspective (Therborn
2006). The different dimensions of inequality—income, poverty, social
Introduction 5
exclusion, education and social mobility—are linked and interconnected.

Likewise, it is useful to compare poverty and social exclusion levels
between countries to underline the standards of living of different
national populations. This is why we propose in the first part of the book
an analysis of the different dimensions of inequality in the EU, both
among individuals and groups within countries and between European
populations.
Analyses of the change in income inequality are developed in the first
two chapters. Despite some methodological limitations, income indica-
tors are useful to measure inequality at the EU level, as Michael
Dauderstädt shows in his analysis (Chap. 2). He proves that income
inequality between countries and their populations has been stagnant
since the beginning of the economic and social crisis in 2008, after a
period of relative convergence, but still remains high, especially when
comparing the old and new Member States of the EU. Maxime Ladaique
and Guillaume Cohen (Chap. 3) highlight and explain the growth of
income inequalities observed in a large majority of European countries
since the mid-1980s: the development of non-standard work and a com-
mon policy agenda that favours diminishing income redistribution and
progressive taxation are the main drivers of the present situation.
The following two chapters take a multidimensional perspective on
inequality at the European level. Renato Miguel Carmo and Ana Rita
Matias (Chap. 4) focus their work on social vulnerability in the southern
European countries. According to them, the link between resource
inequality and social vulnerability is stronger in the Southern and Eastern
European countries, where the gap with regard to Northern countries is
increasing. António Firmino da Costa and his team (Chap. 5) analyse the
intersections between the distributional inequalities of economic and
educational resources in the EU, as well as the categorical inequalities
between nation states and between social classes. They demonstrate that
social disparities are high between different parts of Europe in terms of
income, but also educational inequalities.
Chapters 6 and 7 develop an overview of social disparities between
national populations of the EU with a focus on poverty and social
exclusion, including social living conditions. Reading the available data
bears out similar trends analysed previously: Southern and Eastern
6 R.M. Carmo et al.
c ountries are more affected by income poverty and material difficulties.

In recent years, efforts have been made at the EU level to build harmon-
ised data and social indicators for the European population as a whole,
especially regarding poverty and social exclusion. According to Eurostat,
an individual is considered as poor and in a situation of social exclusion
when he or she is concerned by one of the three following situations: living
in a household with very low work intensity, earning a disposable income
below 60% of the national median income or being in a situation of severe
material deprivation. These and other indicators are discussed concerning
the methodological option of establishing a defined threshold of the risk
of income poverty (Orsolya Lelkes and Katrin Gasior, Chap. 6) or the
relevance of using the indicator of material deprivation (Brian Nolan and
Christopher T. Whelan, Chap. 7). The last authors additionally present
information regarding the social categories that are suffering from differ-
ent types of social vulnerability.
In the last chapter of this part, Márton Medgyesi examines social
reproduction mechanisms and compares the social situation of young
people in different countries of the EU in relation to their participation
in education and training and the occupations of their parents. At the
European level, social class is still a pertinent category to explain and
describe the discrepancies between social positions and their distinct pos-
sibilities and opportunities. But the possibilities offered to European
people differ strongly regarding their geographic context within the
EU. Following this multidimensional perspective, the author demon-
strates in his chapter that young people are being considerably affected.
He identifies a persistence of inequalities among the young due to social
reproduction mechanisms: family background and more precisely par-
ents’ social situation and educational level have a strong influence on the
life chances of young people.
The goal of the second part of the book is to analyse the current role
and limits of the EU and its institutions in the social domain and to ques-
tion its role in the future. In the original context of the EU, social
prerogatives are national: social policies intended to limit socioeconomic
inequalities and guarantee sufficient accessibility for all to public goods—
education, social security schemes, healthcare and so on—are decided
by the Member States, which have the ability to propose political
Introduction 7
responses to the social consequences of the crisis. But the institutions of

the EU, and especially the European Commission, are also engaged in
the social domain.
The first three chapters of the second part propose analyses of the
nature and limits of EU engagement in the social realm. In Chap. 9,
Cédric Rio discusses existing European social tools and elaborates a
reflection about the way an ambitious Social Europe could adapt to the
social heterogeneity of Member States. He claims that the acknowledge-
ment of common social rights for all Europeans, together with ambitious
redistribution mechanisms between European countries in order to
finance these rights, could advance European social policies without
threatening the diversity of national social systems. Chapters 10 and 11
focus on specific policies associated with inequality. Gwenaëlle Perrier
(Chap. 10) proposes a discussion about the gender equality policy led by
the EU. She recalls that gender equality policy was and still is justified
mainly by economic concerns and the specific need to develop a European
free market. According to her, such a justification has limited the scope
and impact of this policy. Beatriz Tomás Mallén (Chap. 11) focuses on
the recognition of fundamental rights at the EU level through the Charter
in the Lisbon Treaty. She mentions the need to institutionalise common
and guaranteed rights for all by harmonising the two existing normative
systems developed in parallel by the Council of Europe and the EU
institutions.
The last three chapters are more prospective. In Chap. 12, Antoon
Vandevelde contrasts different theoretical visions regarding implementa-
tion of social policies at a European level. Many normative reasons that
can be considered to legitimate ambitious social policies at the EU level,
including the cosmopolitan argument that recognises fundamental rights
to all, are based on the idea of necessary solidarity between European peo-
ple to pursue the common good. But, as Philippe Van Parijs (Chap. 13)
criticises, the facts are completely different: the current situation of the EU
is characterised by limited public transnational interventions, high
inequality levels and a general lack of solidarity among national govern-
ments. This situation is very close to the project dreamed by the neoliberal
author Friedrich Hayek: before the Second World War, he defended a
potential project of multinational federalism as a way to facilitate l iberation
8 R.M. Carmo et al.
of the economy from public interventionism. According to Van Parijs,

an ambitious Social Europe, illustrated by the implementation of a
Eurodividend—an unconditional basic income—could overcome this
‘Hayek’s trap’. Finally, in an interview with Frederico Cantante, Thomas
Piketty (Chap. 14) describes his vision of a Social Europe. Beyond the
statistical trends, Thomas Piketty addresses that the growth in inequality
levels over the last two decades is basically the result of political choices.
According to his analysis, national governments have to take responsibility
for limiting and stopping the rise in inequality and poverty. Moreover, the
current interdependence of national economies in the EU and the great
disparities among European populations should encourage political actors
to elaborate and develop EU social prerogatives. He then argues in favour
of European investment in universities and higher education. In the last
chapter (Chap. 15), the editors of this book address some final remarks
regarding the need to improve and develop an European Social agenda.
It was possible to publish this book thanks to the support of Ile-de-France
region through its PICRI subvention fund, the Laboratory Centre Maurice
Halbwachs (CNRS/EHESS/ENS) in France, the Fondation pour le Progrès
de l’Homme and the French association Observatoire des inégalités. We
would like to thank personnaly Michel Forsé and Caroline Guibet Lafaye,
Justin Scherer, and all persons who trusted in our project and helped to
materialize it, including the contributors and the publishers.
Note
1. In each chapter, the authors include their own precise definition and char-
acterisation regarding the inequality or poverty indicators that are used
and discussed in their analysis.
References
Atkinson, A. B. (2015). Inequality. What can be done? Cambridge, London:
Harvard University Press.
Crespy, A., & Menz, G. (Eds.). (2015). Social policy and the Eurocrisis. Quo Vadis
Social Europe. London: Palgrave Macmillan.
Introduction 9
Falkner, G. (2010). European Union. In F. Castles, S. Leibfried, H. Obinger, &

C. Pierson (Eds.), The Oxford handbook of the welfare state (pp. 292–305).
Oxford: Oxford University Press.
Ferrera, M. (2005). The boundaries of welfare: European integration and the new
spatial politics of social protection. Oxford: Oxford University Press.
Lechevalier, A., & Wielgohs, J. (Eds.). (2015). Social Europe—A dead end: What
the Eurozone crisis is doing to Europe’s social dimension. Copenhagen: Djof
Publishing.
Milanovic, B. (2011). The haves and the have-nots. A brief and idiosyncratic history
of global inequality. New York: Basic Books.
OECD. (2011). Divided we stand: Why inequality keeps rising. Paris: OECD
Publishing.
OECD. (2015). In it together: Why less inequality benefits all. Paris: OECD
Publishing.
Piketty, T. (2014). Capital in the twenty-first century. Cambridge, MA: The
Belknap Press of Harvard University Press.
Stiglitz, J. (2012). The price of inequality: How today’s divided society endangers our
future. New York: W. W. Norton & Company.
Therborn, G. (Ed.). (2006). Inequalities of the world. New theoretical frameworks,
multiple empirical approaches. London: Verso.
Wilkinson, R., & Pickett, K. (2009). The spirit level. Why more equal societies
almost always do better. London: Allen Lane/Penguin Books.
Renato Miguel Carmo is an assistant professor at the Department of Sociology

of University Institute of Lisbon (ISCTE-IUL) and research fellow at the Centre
for Research and Studies in Sociology (CIES-IUL), Portugal. He is Director of
the Inequality Observatory (OD) and member of the European network
Inequality Watch. Issues such as social and spatial inequalities, public policy,
mobilities and social capital have been at the core of his research projects. His
recent publications have appeared in European Societies, Sociologia Ruralis, Time
& Society, Sociological Research Online, European Planning Studies, Portuguese
Journal of Social Science and others.
Cédric Rio is a philosopher specialised in social justice and inequality and cur-
rently a researcher associated to the Centre Maurice Halbwachs (CNRS/EHESS/
ENS) in France. He is the coordinator of Inequality Watch, an independent
European network that focuses on inequality.
10 R.M. Carmo et al.
Márton Medgyesi is a senior researcher at TÁRKI Social Research Institute and

at Institute for Sociology, Centre for Social Sciences at the Hungarian Academy
of Sciences. He holds an MSc in Applied Economics from Sciences Po, Paris,
and a PhD in Sociology from Corvinus University, Budapest. His main research
areas are empirical research on income distribution, intergenerational transfers
and economic attitudes. He has been involved in various international projects
including EU FP7 projects Growing Inequalities’ Impacts (GINI) and Strategic
Labour Transitions for Youth Labour in Europe (STYLE).
Part I
Inequality and Poverty
in European Union
2
Disposable Income Inequality, Cohesion
and Crisis in Europe
Michael Dauderstädt
2.1 Introduction
During the present crisis beginning in 2008, people worry about rising
inequality, weaker social protection and the divergence of income levels
between the core and the periphery of the European Union (EU). The
financial crisis has been blamed on inequality (Rajan 2010; OECD 2015)
as poor strata of the population (in the United States, but also in Europe’s
periphery) borrowed funds to acquire housing or maintain consumption
levels in spite of low and stagnating wages. On the side of lenders, high
inequality contributed to an overhang of savings as the rich have a higher
propensity to save, and investment in the real economy stagnates in the
face of weak demand.
When governments increased their debt to bail out a financial sector
where bankers and investors had enjoyed astronomical revenues and
incomes, public discontent had increased (Occupy Wall Street).
Prominent economists like Piketty (Piketty 2013) and Stiglitz (Stiglitz
2012) pointed out the rising levels of wealth, debt and the related income
M. Dauderstädt (*)
Friedrich Ebert Foundation, Bonn, Germany

https://doi.org/10.1007/978-3-319-65006-7_2
14 M. Dauderstädt
inequality and warned about their consequences. Even mainstream

institutions such as the International Monetary Fund (IMF) or the
Organisation for Economic Co-operation and Development (OECD)
criticised the negative impact of rising inequality (Kumhof and Rancière
2010; Gupta 2014; Ostry et al. 2014; OECD 2015).
Concerns about declining cohesion within Europe grew as southern
European countries faced shrinking economies and rising poverty and
unemployment. The following chapter discusses the dimensions of
inequality in the EU and analyses their relationship with the crisis.
2.2 The Dimensions of European Inequality

Inequality can be considered between different entities (such as coun-
tries, regions, households, individuals) with regard to different qualities
(such as income, wealth, life expectancy) using different indicators and
measures. Here, we focus on (disposable)1 income inequality within the
EU. The analysis of inequality in a multi-country context implies certain
problems, which have been discussed in depth on a global level by
Milanovic (2016) and Bourguignon (2015). They differentiate between
three types of international inequality: (1) between nations regardless of
their population; (2) between nations weighted by population; (3)
between people (households). The last measure takes into account the
distribution of income within and between countries.
To compare incomes in an international context, one can use two mea-
sures: (1) at exchange rates and (2) at purchasing power parity (PPP). The
use of these two different measures makes a lot of sense when one com-
pares income levels between countries with different currencies, as the
value (e.g. converted into Euros) might change with the (real) exchange
rate, which depends on variations in the nominal exchange rate and on
inflation, which are different from country to country. Prices might
change at different rates within countries between different regions, too.
The analysis of international inequality and its results depend on the
choice of indicator, too. First, there is an almost ethical question: Are
absolute differences between incomes more relevant than relative ones?
Are poor people content to see their income grow faster than that of the
Disposable Income Inequality, Cohesion and Crisis in Europe 15
rich or do they want to reduce the absolute difference? In the context of

convergence between countries (see section 2.2.1 below), the first concept
is called beta convergence; the second sigma convergence, as the standard
deviation, indicated in mathematics by the Greek letter sigma, measures
absolute differences. To offer a (not unrealistic) numerical example: if at
the beginning of the comparison the average GDP/capita of the richer
country is 5 times the one of the poorer country and the rich country’s
economy grows at an annual rate of 2% and the poor at 5%, it would take
the poor country 55 years to catch up, and only after 24 years would the
absolute difference between the two average incomes begin to shrink (it
would still increase for the first 24 years in spite of the higher growth rate).
Second, an indicator of international inequality should better be
decomposable into intra- and inter-country inequality. This condition is
fulfilled by the Theil index2 and the quintile ratio (S80/S20), but not by
the Gini index. The Gini index varies between 0 in the case of perfect
equality and 1 in the case that all income goes to one entity (e.g. house-
hold). If one compares only the degree of poverty rather than the distri-
bution of income as such, the Foster–Greer–Thorbecke (FGT) index is
decomposable as well.3 The indicator we use most often is the ratio
between the average income of the richest and poorest quintiles (= 20%)
of the respective population (the so-called quintile ratio S80/S20).
If one analyses income inequality in a multi-country setting like the
EU, different dimensions are of interest.
(A) Disparities between EU Member States measured in terms of aver-

age per capita income; in this case, the inequality within the coun-
tries is neglected;
(B) Disparities between regions of the EU; in this case, the inequality
within the regions is neglected;
(C) Disparities between households within countries;
(D) Disparities between households within the EU as a whole taking
into account both inequalities, (A) and (C).
The reduction of disparities between countries (dimension A) and

between regions (dimension B) is usually called ‘convergence’ or ‘cohesion’.
The funds used by the EU to reduce regional inequalities are cohesion
16 M. Dauderstädt
funds. There are regular reports by the EU on development of regional

disparities.4 Dimension (C) refers to the well-known inequality within
countries. Let us briefly consider the three other dimensions (A, B and C)
before focussing on European-wide inequality (D).
2.2.1 Divergence and Convergence5
Greater wealth is one reason why poor countries joined the EU. For the
EU itself, convergence is an official goal. Historically, for the first two
poor countries that became Member States (Ireland in 1972 and Greece
in 1981), progress was slow. Portugal and Spain (entry in 1986) experi-
enced good catch-up growth for several years. For the post-communist
countries of Central and Eastern Europe (CEE), catching up has been
key. The biggest success story so far has been Ireland, which showed spec-
tacular growth in the 1990s (i.e. 20 years after entry), thus becoming the
second-richest country in the EU (measured at per capita GDP).
Income disparities within the EU are huge. The poorest countries
(Bulgaria, Romania and the Baltic states) have per capita incomes below
€20,000, while this figure exceeds €70,000 for the richest country
(Luxemburg) (see Table 2.1). The differences become greater when one
compares incomes at exchange rates, as PPPs reflect lower price levels in
poorer countries (in particular rents and services).
Regarding different forms of convergence (beta and sigma, see above)
one can see that there has been beta convergence since 1999 as most new
Member States in CEE (top of Table 2.1) have grown much faster than
the core EU countries (bottom of Table 2.1). But there was no clear sigma
convergence in the EU. Only after 2007, income disparities between
countries have declined by approximately 5% or 10% if measured by the
standard deviation of their average per capita income at exchange rates or
at PPPs, respectively. If one calculates the S80/S20 ratio for the EU as a
whole by adding up countries until their total aggregate population
reaches a fifth of the EU (about 100 million), the ratio has declined
between 2005 and 2014 from around 5.4 to 3.7 at exchange rates and
from 2.6 to 2.0 at PPP.6 This ratio neglects income disparities within
countries.
Table 2.1 Level and change in per capita income at purchasing power parities
2006 (in € PPP) 2015 (in € PPP) Change (in %)
EU (28 countries) 24,687 28,924 17.2
Euro area (19 countries) 26,662 30,659 15.0
Bulgaria 9381 13,305 41.8
Romania 9381 16,487 75.7
Poland 12,344 19,958 61.7
Latvia 13,578 18,511 36.3
Lithuania 13,825 21,404 54.8
Croatia 14,318 16,776 17.2
Hungary 15,306 19,668 28.5
Slovakia 15,306 22,271 45.5
Estonia 15,800 21,404 35.5
Malta 19,256 25,742 33.7
Portugal 19,503 22,271 14.2
Czech Republic 19,996 24,585 22.9
Slovenia 21,231 24,007 13.1
Greece 23,206 20,536 −11.5
Cyprus 24,440 23,428 −4.1
Spain 25,181 26,610 5.7
Italy 25,921 27,478 6.0
France 26,415 30,659 16.1
Finland 28,143 31,238 11.0
Belgium 28,637 33,841 18.2
Germany 28,884 36,155 25.2
United Kingdom 30,118 31,816 5.6
Denmark 30,365 35,866 18.1
Austria 30,859 36,733 19.0
Sweden 30,859 35,577 15.3
Netherlands 33,327 37,312 12.0
Ireland 36,043 41,940 16.4
Luxembourg 63,199 78,384 24.0
Source: Eurostat and calculations by the author
Since the beginning of the crisis, recovery in Europe has been unequal.
The resulting divergence does not appear in the general measures as most of
the poorer Member States in CEE returned to their former growth path
while the depressed, austerity-struck economies of Ireland, Greece, Spain,
Portugal and Cyprus belonged to the European top or middle ‘class’, regard-
ing income per capita. Has there been convergence after all? The answer
depends on the measure or metric. If one measures relative disparities (e.g.
by using S80/S20), countries did converge. If one considers absolute differ-
ences (e.g. by using standard deviation), countries did not converge.7
18 M. Dauderstädt
2.2.2 Regional Cohesion
Income (average per capita income) disparities between regions are higher
than between Member States (see above A) because regional income dis-
parities within countries are high and tend to increase. Many economic
activities are concentrated in growth centres, often the country’s capital.
In Great Britain, for instance, the ratio of average income between
London and Wales (the poorest region) is 1:5. In the EU as a whole, the
richest region (on the NUTS-2 level8) is the City of London with a per
capita income (at PPP) of more than €80,000 compared to €7200 in the
Romanian border region Nord-Est.
For the EU as a whole, regional inequality (measured by the standard
deviation) has increased (no sigma convergence). Nonetheless, there has
been beta convergence as regions in poorer Member States have grown
faster thanks to the faster growth of their national economies. If one cal-
culates a European S80/S20 ratio by creating the poorest and richest
European quintiles (of 100 million people) by adding up poorest and
richest regions neglecting intra-region inequalities, the resulting values
are 4 in 2000 and 2.8 in 2011. This decline again reflects the catching-up
growth of poorer Member States. Within countries, regional inequality
has increased. For the 22 Member States of the EU-28 that are divided
into NUTS-2 regions (all except the smaller countries Luxemburg, Malta,
Cyprus and the three Baltics), the standard deviation increased on average
by 106% between 2000 and 2011, while within the new Member States,
the rise was even stronger. Regional inequality in Romania increased by
300%.9
2.2.3 National Inequality
Recently, concerns about national inequality have increased. Even inter-

national institutions not known as progressive or concerned about social
justice such as the OECD and the IMF have started to publish critical
studies of inequality and its consequences for growth and stability.10 On
average in the EU, inequality within countries has hardly increased. The
average of the national S80/S20 ratios has remained at about 5 (see the
12
11
10
EU-25 Euro
9
EU-25 PPS
8
EU-27 Euro
7 EU-27 PPS
6 EU-27 Eurostat
4
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Fig. 2.1 Development of inequality in the EU (2005–2015)

Source: Eurostat, authors’ calculations
bottom curve in Fig. 2.1 below). But that average hides substantial dis-
parities. In Croatia, Denmark and France, the ratio increased between
2007 and 2013 by more than 15%, in Greece by 10%, while it declined
by more than 10% in Romania, the United Kingdom and the Netherlands.
National inequality is affected by redistributive policies such as pro-
gressive taxation, social protection and transfer payments to old, sick and
unemployed people. The resulting distribution of disposable income is
more equal than the primary distribution of market income. However,
the effect of these policies varies widely among Member States. The dif-
ferences between the Gini coefficients for market and disposable income
range from 0.14 (e.g. Finland, Slovenia, France) to 0.09 (Spain,
Netherlands) and 0.08 (Estonia).11
2.2.4 European-Wide Inequality
While much research and statistical evidence focuses on the first three
dimensions of inequality (A, B and C), European-wide inequality (D) is
more difficult to calculate and rarely assessed. Using the S80/S20 ratio as
an indicator, Eurostat, the statistical office of the EU, offers a value which
20 M. Dauderstädt
it calculates as the weighted (by population) average of the national S80/

S20 values. This measure is obviously false12 as it neglects the enormous
income differences among countries and assumes that the richest (poor-
est) quintile of the EU population (about half a billion people) consists of
the sum of the richest (poorest) national quintiles. This mistake can be
corrected by constructing the true richest and poorest quintiles of the EU.
How do we construct the richest and the poorest EU quintiles, which
comprise each around 100 million people? If we had income data for all
EU households, we could calculate the income of the bottom and the top
quintiles and get a relatively good S80/S20 ratio for the EU as a whole. If
we do not have these detailed data, we can approximate the value by
building the bottom and top quintiles in different ways.
The easiest (but also very rough) estimate would use Member States
and their average GDP/capita, thus neglecting the disparities within the
countries. By ordering Member States according to their average GDP/
capita, we can form the desired EU quintiles by adding up countries from
the bottom respectively from the top until we have arrived at 100 million
people. Usually this means cutting off part of the last country’s popula-
tion when the limit of 100 million is reached. This is approach 1 in
Table 2.3.
In quite a similar way one can use regions. The distortion will be lower
because regions are smaller and an appropriate selection of regions can fit
the actual poorest (or richest) quintile of the whole EU more closely. But
the inequality within regions is neglected. This is the approach 2 in
Table 2.3.
In our approach we wanted to get even closer. Thus we constructed our
EU quintiles out of the 135 national quintiles13 derived from the EU-SILC
data (household survey). We ordered these 135 quintiles by average per
capita income (see Tables 2.2a and 2.2b). For the poorest EU quintile, we
began from the bottom, for the richest quintile from the top and
selected as many national quintiles as necessary to make up 100 million
people (= a fifth of the EU population). We were then able to sum the
total income of these quintiles in order to get the income of the EU
quintile. The ratio between the incomes of the poorest and the richest
quintiles thus construed yields the S80/S20 ratio for the EU as a whole.
Table 2.2a The poorest (dark grey) and richest (light grey) quintiles in the EU
(euros) (2015)
2015 Income per capita in euros
Member state Q1 Q2 Q3 Q4 Q5
Bulgaria 1256 2388 3350 4557 8902
Romania 685 1563 2310 3134 5674
Latvia 2243 4081 5828 8110 14579
Lithuania 2005 3625 5186 7451 14395
Poland 2512 4217 5562 7220 12366
Estonia 3169 5580 7947 11089 19663
Hungary 2220 3571 4586 5915 9530
Slovakia 3419 5623 6900 8430 12088
Czech
Republic 4214 6123 7424 9185 14777
Portugal 3436 6232 8416 11234 20656
Greece 2714 5443 7515 10103 17626
Malta 6768 10166 13485 17321 28082
Spain 4549 9499 13360 18375 31255
Slovenia 6280 9831 12321 15060 22553
Italy 5996 11593 15884 20959 35014
Cyprus 6780 10281 13827 18563 35251
Germany 9339 15845 20723 26782 44788
France 11219 16924 21471 27179 48094
Belgium 10891 16621 21753 27484 41578
United Kingdom 9540 15808 21043 28373 49901
Austria 11649 18413 23340 29250 47099
Finland 12920 18868 23766 29711 45929
Netherlands 11346 16957 21346 26600 43367
Sweden 12974 20904 26651 33104 48790
Ireland 10528 16159 21617 28475 47391
Denmark 14056 22553 28388 35248 57340
Luxembourg 17385 26925 35081 45258 73832
Source: Eurostat and authors’ calculations
22 M. Dauderstädt
Table 2.2b The poorest (dark grey) and richest (light grey) quintiles in the EU
(PPP) (2015)
2015 Income per capita in PPP
Member state Q1 Q2 Q3 Q4 Q5
Bulgaria 2595 4933 6921 9414 18388
Romania 1289 2941 4347 5898 10679
Latvia 3114 5665 8092 11259 20241
Lithuania 3194 5774 8260 11867 22929
Poland 4499 7552 9961 12930 22147
Estonia 4190 7380 10509 14664 26002
Hungary 3858 6207 7971 10281 16563
Slovakia 5042 8293 10175 12433 17827
Czech
Republic 6615 9612 11654 14419 23196
Portugal 4203 7623 10294 13740 25263
Greece 3177 6371 8796 11826 20631
Malta 8367 12568 16671 21414 34718
Spain 4928 10290 14472 19906 33858
Slovenia 7691 12040 15090 18444 27620
Italy 5825 11263 15431 20362 34016
Cyprus 7527 11414 15350 20609 39136
Germany 9202 15613 20420 26390 44131
France 10417 15715 19937 25237 44657
Belgium 10019 15291 20012 25284 38250
United Kingdom 8068 13368 17795 23993 42199
Austria 10909 17244 21858 27393 44109
Finland 10564 15427 19432 24293 37553
Netherlands 10331 15440 19436 24220 39487
Sweden 10332 16648 21224 26364 38856
Ireland 5737 8804 11778 15515 25822
Denmark 10101 16208 20402 25332 41209
Luxembourg 14435 22356 29128 37579 61304

Table 2.3 Different measures of European-wide inequality (quintile ratios)

Indicator (S80/S20)
Approach Using Neglecting Earliest Year Latest Year
1 Average national Intra-country 2.6 2005 2,0 2014
incomes inequality (PPP) (PPP)
5.4 (€) 3.7 (€)
2 Average regional Intra-region 4 (PPP) 2000 2.8 2011
incomes inequality (PPP)
3 Average of national Inter-country 5 (PPP) 2005 5 (PPP) 2013
ratios weighted by inequality
population,
(Eurostat value)
4 National quintiles, Intra-quintile 7 (PPP) 2007 6.2 2014
taking into account inequality 11 (€) (PPP)
both inequalities 9.4 (€)
The composition of the EU quintile has changed only slightly over the
years. The poorest quintile generally comprises the four or five poorest
quintiles of Bulgaria and Romania, the three or four poorest in the Baltic
States, Poland and Hungary, the two poorest in the Czech Republic,
Slovakia and Portugal, and one each from Greece, Malta, Spain, Slovenia
and Italy. The richest EU quintile comprises the three richest quintiles of
Luxembourg and Denmark, the two richest of Ireland, Sweden, the
Netherlands, Finland, Austria and France, as well as the richest from the
United Kingdom, Belgium, Germany, Cyprus, Italy and Spain. If a coun-
try grows strongly and moves up in the EU ranking of per capita incomes,
its national quintiles will show up less in the poorest and more in the
richest EU quintile.14
The Tables 2.2a and 2.2b show the national quintiles and the subsets
that form the richest and poorest European quintiles in 2015.
If we summarise the different ways to calculate a S80/S20 ratio for the
whole EU, one can measure European-wide inequality by constructing
the respective quintiles of about 100 million people and calculating the
ratio between the richest and the poorest quintile, which delivers differ-
ent S80/S20 ratios depending on the approach:
24 M. Dauderstädt
1. Summing up whole nations (or parts thereof ) to create the EU quin-

tiles neglects intra-country inequality,
2. Summing up whole regions neglects intra-region inequality,
3. Summing up the poorest and richest national quintiles, as the official
Eurostat value does, neglects inter-country inequality.
4. Our approach (Tables 2.2a and 2.2b) takes both dimensions into
account.
The following Table 2.3 provides an overview of the values resulting

from the different approaches in different years.
2.3 The Development of European Inequality

As illustrated in Fig. 2.1,15 the EU S80/S20 ratio resulting from our
method (4th approach) is much higher than the official and inaccurate
Eurostat value. While the latter is about 5, our value ranges between 6
and 7 (at PPP) and 9 and 10 (in euros). For comparison, other major
economies, according to the UN Human Development Report, have
mostly lower values of 4.9 (India), 7.3 (Russia), 8.4 (United States) and
9.6 (China).16 National S80/S20 values for EU Member States are
between 3 and 4 (in relatively egalitarian Scandinavian countries) and 6
and 7 (in Spain, Greece, Baltics); the direction of change is also some-
times different. While the Eurostat value (lowest curve in Fig. 2.1) is rela-
tively stable, the true value declined until 2009, increased shortly after
the great recession and has stagnated since.
The decline of European-wide inequality was mostly due to the catch-
up growth of poorer countries (see section 2.2.1 above), as intra-country
inequality did not change much (see section 2.2.3 above). After a short
but substantial rise of inequality during the great recession, the former
trend continued, albeit much more slowly. Measured in terms of PPPs,
inequality has still fallen. If one considers the changes in the income of the
richest and poorest quintiles in the EU between 2011 and 2014, one sees
the opposite development, depending on how one measures it. In exchange
rate terms, the income of the richest quintile increased by 3.9% between
2011 and 2014, while in terms of PPP, it rose by only 1.9%. In the case of
the poorest quintile, it was the other way around: income in exchange rate
terms rose by only 2.4%, while in terms of PPP, it rose by 6.3%.
What underlies this discrepancy? Basically, it was the different devel-
opment of exchange rates and inflation. Especially in poorer countries
and in countries compelled to pursue austerity policies, the trend between
2011 and 2014 was deflationary development or below-average inflation.
This applies in particular to Greece, Ireland, Portugal and Spain (GIPS),
but also to many of the new Member States.
More recently, a study on European inequality using Gini and Theil
indexes has been published (Bönke and Schröder 2015), which covers the
years 2004–2011 and most (but not all) EU Member States. Calculating
a European Gini index is difficult as the Gini cannot be decomposed into
intra-country and inter-country components without a residual, while
the Theil can. The authors arrive at a Gini value of around 0.32 and a
Theil of 0.16. Both values declined since 2004 for the EU-22 until the
crisis and stagnated afterwards, thus confirming our findings. In contrast,
after 2009 within the Euro zone, inequality increased, according to the
authors. It was the deep recession in the southern periphery that showed
up in the supranational inequality indicator, if one excludes the non-
Euro countries in CEE.
The different development of inequality according to different
approaches, particularly approaches 3 and 4 illustrated in Fig. 2.1, is also
responsible for different poverty dynamics in the EU. Poverty is mea-
sured here as the share of households with an income below 60% of the
median income. While national poverty rates (using national median
incomes) stagnated, EU-wide poverty (using the median EU income)
decreased substantially between 2005 and 2011 (Goedemé et al. 2014).
2.4 Crisis and Inequality

Up to the threefold crisis—financial market crisis, great recession and
sovereign debt panic—Europe, which is committed to social cohesion,
was able to point to solid progress. Unemployment was falling; life expec-
tancy was rising; and income inequality, although increasing in some
countries, was declining in the EU as a whole thanks to growth in the
26 M. Dauderstädt
poorer Member States. After falling substantially up to the great recession

of 2009, convergence within the EU suffered a setback in 2010, but then
appeared to resume its long-term trajectory of income convergence. Since
2011, however, this process has practically ground to a halt, especially in
euro terms (rather than in PPP).
Inequality has contributed to the crisis in various ways. Rising inequal-
ity in the United States led to more borrowing by the poor and higher
savings of the rich, in search of yield. The collapse of the mortgage mar-
ket triggered the financial crisis. In Europe, imbalances resulted from
inequality, too. Large export surpluses in Germany in particular reflect
the lack of internal demand due to stagnating wages and the growing sav-
ings of the rich. These savings then financed the current account deficits
of the countries in the poorer EU periphery, which have been eager to
catch up with the richer core. It was this, unfortunately debt-driven,
boom that fuelled growth and reduced inequality in the EU.
After the financial market crisis and great recession of 2008, many
poorer countries—especially in Central and Eastern Europe—were able
to resume their growth path. It was the countries affected by the sover-
eign debt panic and austerity policies—Greece, Ireland, Portugal, Spain
and Cyprus—that fell back. Because they do not figure among the poor-
est countries in the EU, however, their deep crisis scarcely increased
European-wide inequality, but only retarded its reduction.
This effect continues to be felt, but now—after 2012—some of the
new Member States (Bulgaria, Czech Republic, Slovenia) have experi-
enced a slump, while two large, wealthy countries—Germany and the
United Kingdom—exhibited weak, but above-average, growth. The
economies of some richer countries—such as Finland, Italy, Belgium and
Denmark—shrank, while many new Member States continued to grow
strongly (Baltic States, Poland, Romania, Hungary, Slovakia). Thus, the
main cause of the stagnating inequality is not the diverging development
of domestic inequality, but the end of strong catch-up growth in some
poorer EU Member States.
The key finding with regard to recent years is the notable slowdown of
the former decline in inequality. Social Europe’s promise to reduce income
differences in the EU is no longer really being kept. Without vigorous
growth in the poorer countries, inequality remains high. But where is
growth supposed to come from? Germany and important EU bodies con-

tinue to rely on structural reforms and austerity policies, whose effects on
growth are scarcely discernible. The policies forced upon the countries in
the Southern periphery suffer from conflicting goals: Austerity, internal
devaluation and growth hardly reinforce each other. Reducing govern-
ment spending harms growth. Lowering wages to improve competitive-
ness reduces tax revenues and slows down budget consolidation. Growth
and structural competitiveness (higher productivity, better quality, export
diversification) require appropriate public policies such as improved edu-
cation and more spending on research and development.
Given these multiple, self-imposed constraints on fiscal policy, demand
growth had to rely on monetary policy and exports. But the European
Central Bank (ECB’s) more assertive policy (after 2012) could only
reduce interest rates and stabilise asset prices without restoring vigorous
growth. The weakness of the euro vis-à-vis other currencies (one conse-
quence of the loose monetary policy) has supported exports. But without
sufficient internal demand, growth remains weak.
In the meantime, at least, the new (elected in 2014) European
Commission has recognised that other policies are needed. However, the
planned European Fund for Strategic Investment is on too small a scale
and depends on a somewhat questionable willingness on the part of pri-
vate investors to leverage the relatively meagre public resources of
€16 billion on a massive scale (by a factor of 15). It is doubtful that the
expected total volume of almost €300 billion of additional private
resources will be mobilised. The effects will take much time to be felt in
the form of higher growth and lower unemployment due to a complex
process of project identification, evaluation and implementation.
In order to reduce disparities between countries, investment funds
should be concentrated in poorer Member States. Within countries, the
build-up of wealth resulting from investment will primarily benefit richer
households. This holds in particular when the EU funds are used to
reduce risks for the private investors and policies to improve the invest-
ment climate aim exclusively at lower wages, more flexible labour mar-
kets and weaker social protection. But the greatest obstacle to investment
remains the lack of demand. Only stronger demand based on widespread
income growth will lead to sustainable growth. In order to achieve this,
investment must create jobs that deserve the label ‘decent work’.
28 M. Dauderstädt
Notes
1. Income after taxes and social transfers.
2. The Theil index varies between 0 and N (with N the number of com-
pared units).
3. See Goedemé et al. (2014) for an application on Europe.
4. For the latest, the sixth report of 2014 see: http://ec.europa.eu/regional_
policy/sources/docoffic/official/reports/cohesion6/6cr_en.pdf
5. For a detailed analysis, see Dauderstädt (2014).
6. Calculation by the author using Eurostat data; see also Table 2.3.
7. For a more in-depth discussion of the influence of different metrics on
multi-country inequality, see Nino-Zarazua et al. (2016).
8. Nomenclature for Territorial Units for Statistics (NUTS) is the EU clas-
sification of regions; NUTS-1 are big regions such as German ‘Länder’;
NUTS-2 are smaller regions defined for regional policy measures.
9. Calculation by the author using Eurostat data.
10. See OECD (2011), OECD (2015), Kumhof and Ranciere (2010),
Gupta (2014).
11. See OECD (2011); the OECD average is 0.1.
12. See also Atkinson et al. (2010), p. 109.
13. Today we would need 140 as Croatia has joined the EU as its 28th mem-
ber state. In order to facilitate the comparison over time, we still use 135
(=5 × 27).
14. For a detailed explanation, see Dauderstädt (2008) or Dauderstädt and
Keltek (2011).
15. Taken from Dauderstädt and Keltek (2015, 2016).
16. The figures might nevertheless not be fully comparable as data sources
and methodologies of household surveys vary from country to country.
References
Atkinson, A. B., Marlier, E., Montaigne, F., & Reinstadler, A. (2010). Income
poverty and income inequality. In A. B. Atkinson & E. Marlier (Eds.), Income
and living conditions in Europe (pp. 101–131, here p. 109). Luxembourg:
Eurostat and Publications Office of the EU.
Bönke, T., & Schröder, C. (2015). European-wide inequality in times of financial
crisis. DIW Discussion Papers 1482.
Bourguignon, F. (2015). The globalization of inequality. Princeton and Oxford:

Princeton University Press.
Dauderstädt, M. (2008). Ungleichheit und sozialer Ausgleich in der erweiterten
Europäischen Union. Wirtschaftsdienst, 3/2008.
Dauderstädt, M. (2014). Convergence in crisis. European integration in jeop-
ardy. Retrieved from http://library.fes.de/pdf-files/id/ipa/11001.pdf
Dauderstädt, M., & Keltek, C. (2011). Immeasurable inequality in the European
Union. Intereconomics, 1, 44–51.
Dauderstädt, M., & Keltek, C. (2015). Social Europe in crisis. Retrieved from
http://library.fes.de/pdf-files/id/ipa/11513.pdf
Dauderstädt, M., & Keltek, C. (2016). No progress on social cohesion in
Europe. Retrieved from http://library.fes.de/pdf-files/id/ipa/12668.pdf
Goedemé, T., Collado, D., & Meeusen, L. (2014). Mountains on the move:
Recent trends in national and EU-wide income dynamics in old and new EU
Member States. ImPRovE Working Paper No. 14/05, Antwerp. Retrieved
from http://improve-research.eu
Gupta, S. (2014). Fiscal policy and income inequality. IMF Policy Paper,
International Monetary Fund, Washington, DC.
Kumhof, M., & Rancière, R. (2010). Inequality, leverage and crises. IMF Working
Paper WP/10/268, International Monetary Fund, Washington, DC. Retrieved
from https://www.imf.org/external/pubs/ft/wp/2010/wp10268.pdf
Milanovic, B. (2016). Global inequality. A new approach fort the age of globaliza-
tion. Cambridge and London: The Belknap Press of Harvard University
Press.
Nino-Zarazua, M. et al. (2016). Global inequality: Relatively lower, absolutely
higher. Retrieved from http://onlinelibrary.wiley.com/doi/10.1111/
roiw.12240/abstract
OECD. (2011). Divided we stand: Why inequality keeps rising. Paris: Organisation
for Economic Co-operation and Development.
OECD. (2015). In it together: Why less inequality benefits all. Paris: Organisation
for Economic Co-operation and Development.
Ostry, J. D., Berg, A., & Tsangarides, C. G. (2014). Redistribution, inequality
and growth. IMF Staff Discussion Note 14/02, International Monetary Fund,
Washington, DC. Retrieved from http://www.imf.org/external/pubs/ft/
sdn/2014/sdn1402.pdf
Piketty, T. (2013). Le capital au XXIe siècle. Paris: Seuil.
Rajan, R. G. (2010). Fault lines: How hidden fractures still threaten the world
economy. Princeton: Princeton University Press.
Stiglitz, J. (2012). The price of inequality. New York: Norton.
30 M. Dauderstädt
Michael Dauderstädt Dr. rer. pol., dipl. math. Study of mathematics,

economics and development policy in Aachen, Paris and Berlin. Between 1980
and 2013, he served in various positions with the Friedrich Ebert Foundation;
since 2013, he has been a freelance consultant. His areas of specialisation include
international political economy, European integration, German economy and
alternative growth models.
3
Drivers of Growing Income Inequalities
in OECD and European Countries
Guillaume Cohen and Maxime Ladaique
3.1 Introduction
The gap between rich and poor in Organisation for Economic
Co-operation and Development (OECD) and European Union (EU)
countries has reached its highest level over the past three decades.1 This
chapter first presents some comparisons on income inequality trends
between European and OECD countries (Sect. 3.2). We focus in the
following section on the evolution of the situation in the past decades
(Sect. 3.3). During this period, income distributions have been pro-
foundly transformed by the interplay of globalisation, technological
change and regulatory reforms leading to profound structural changes in
labour markets. In addition, taxes and benefits have tended to redistribute
less from the mid-1990s up to the crisis. These factors, along with a num-
ber of demographic and social trends, are key to understanding the rise in
income inequality in the OECD area and EU countries. Following the
approach of identifying policies which are effective in tackling inequality,
G. Cohen • M. Ladaique (*)

Organisation for Economic Co-operation and Development (OECD),
Paris, France

https://doi.org/10.1007/978-3-319-65006-7_3
32 G. Cohen and M. Ladaique
the OECD proposes a strategy based upon four pillars: women’s partici-
pation, employment, skills and education, and redistribution (Sect. 3.4).
3.2 Level and Trends

3.2.1 H
ow Unequal Are European Union and OECD
Countries?
Differences in levels of income inequality in the EU are significant.

Within the EU region, the Gini coefficient—a common measure of
income inequality that scores 0 when everybody has identical incomes
and 1 when all the income goes to only one person—ranges from 0.25 in
Denmark, Slovenia and Slovakia to 0.35 in Lithuania, the United
Kingdom and Bulgaria. Income inequality is generally around the EU
average among continental European countries (France, Germany) and
above the EU average among Mediterranean countries (Greece, Italy,
Portugal, Spain). In comparison, the distribution of income is sometimes
larger beyond Europe, at 0.40 or above in the United States, Turkey,
Mexico and Chile.
Alternative indicators of income inequality suggest similar rankings.
The gap between the average incomes of the richest and the poorest 10%
of the population was at around 8 for the average of the EU countries,
ranging from 5–6 in Nordic and central European countries to almost
two times larger (10–11) in English-speaking and Baltic countries (see
Fig. 3.1).
3.2.2 Has the Gap Between Rich and Poor Widened?
Over the past three decades, the gap between rich and poor has widened
in two-thirds of EU countries and three-quarters of OECD countries for
which long-term data series back to the mid-80s are available. Income
inequality followed different patterns across European countries. It first
started to increase in the 1980s in the United Kingdom. The trends in the
2000s showed a widening gap between rich and poor also in traditionally
Gini coefficient (left scale) ( →) Gap between richest and poorest average income (right scale)
0.52 27
0.48 24
0.44 21
0.40 18
0.36 15
0.32 12
0.28 9
0.24 6
0.20 3
0.16 0
k y c y y g y l * y
ar enia blic wa bli and and ium den tria nds land gar alta an land atiaour rea land nce ania ada ralia Ital and ain pan ga onia ece tvia nia om aria el tes rke xico hile ope -28 CD
enm lov epu Nor epu Icel Finl BelgSwe Auserla tzer un M erm Po Cro mb Ko Ire Fra om Can ust zeal Sp Ja ortuEst Gre Laithua ingd ulg Isra Sta Tu Me C Eur EU OE
H G R A P B d
D S kR hR
c
th wi xe w L dK ite CD
a Ne S Lu Ne ite Un
Sl
ov Cze Un OE
Fig. 3.1 Level of income inequality, 2013 or latest year

Source: OECD Income Distribution Database (http://oe.cd/idd)
Note: non-OECD EU countries are shown in light blue
*The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of
such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the
Drivers of Growing Income Inequalities in OECD and European...
West Bank under the terms of international law

33
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“There is one point I thought you might be able to tell me,” Rawley
said, looking across the fire when he had finished reading. “This ‘City
which is by the river in the wilderness’—and ‘In the midst thereof a
ferryboat which is by the brink of the river.’ Do you know what place
is meant by that? Is it El Dorado, Nevada? Because Grandfather’s
diary tells of going up the river to El Dorado. And I remember, now,
there was some kind of Bible reference written over the name. I don’t
remember what it was, though. I didn’t look it up. We’ll have to make
sure about that, for the directions start from that point. It says we’re
to go through the city which is by the river, and turn northward—and
so on.”
The Indian reached out a hand, lifted a stick of wood and laid it
across the fire. His eyes turned toward the river.
“Many times, when the air was warm and the stars sat in their
places to watch the night, my sergeant came here with me, and I
gathered wood to make a fire. Many hours he would sit here in his
chair beside the river. Sometimes he would talk. His words were of
the past when he was the strongest of all men. Sometimes his words
were of El Dorado. It is a city by the river, and a ferryboat is in the
midst thereof. It has made many rich with the gold they dig from the
mountains. I think that is the city you must go through.”
“There isn’t any city now,” Rawley told him. “It’s been abandoned
for years. I don’t think there’s a town there, any more.”
“There is the place by the river,” Johnny Buffalo observed calmly.
“There is the great and high mountain. There is ‘the path that no man
knoweth.’”
“Yes, you bet. And we’re going to find it, Johnny Buffalo. I’ve got a
chance to go out that way this month, to examine a mine. I didn’t
think I’d take the job. I wanted to go to Mexico. But now, of course, it
will be Nevada, and I’ll want you to go with me. Do you know that
country?”
A strange expression lightened the Indian’s face for an instant.
“When I killed my first meat,” he said, “I could walk from the kill to
the city by the river. My father’s tent was no more distant than it is
from here to the great city yonder. Not so far, I think. The way was
rough with many hills.”
Impulsively Rawley leaned and stretched out his arm toward the
Indian.
“Let’s shake on it. We will go together, and you will be my partner.
Whatever we find is the gift of my grandfather, and half of it is yours
when we find it. I feel he’d want it that way. Is it a go, Johnny
Buffalo?”
Something very much like a smile stirred the old man’s lips. He
took Rawley’s hand and gave it a solemn shake, once up, once
down, as is the way of the Indian.
“It is go. You are like my sergeant when he held me in his arms
and gave me water from his canteen. You are my son. Where you go
I will go with you.”
CHAPTER FIVE
A CITY FORSAKEN
The storekeeper at Nelson stood on his little slant-roofed porch
and mopped his beaded forehead with a blue calico handkerchief.
The desert wrinkles around his eyes drew together and deepened as
he squinted across the acarpous gulch where a few rough-board
shacks stood forlorn with uncurtained windows, to the heat-ridden
hillside beyond.
“It’s going to be awful hot down there by the river,” he observed
deprecatingly. “You’ll find the water pretty muddy—but maybe you
know that. Strangers don’t always; it’s best to make sure, so if you
haven’t a bucket or something to settle the water in, I’d advise you to
take one along. I’ve an extra one I could lend you, if you need it.”
“We have a bucket, thanks.” Rawley stepped into the dust-
covered car loaded with camp outfit. “El Dorado is right at the mouth
of the canyon, isn’t it?”
The storekeeper gave him an odd look. “This is El Dorado,” he
answered drily. “This whole canyon is the El Dorado. There used to
be a town at the mouth of the canyon, but that’s gone years ago.
Better take the left-hand road when you get down here a quarter of a
mile or so. That will take you past the Techatticup Mine. Below there,
turn to the right where two shacks stand close together in the fork of
the road. The other trail’s washed, and I don’t know as you could get
down that way. Car in good shape for the pull back? She’s pretty
steep, coming this way.”
“She’s pulled everything we’ve struck, so far,” Rawley replied
cheerfully. “Other cars make it, don’t they?”
“Some do—and some holler for help. It’s a long, hard drag up the
wash. And if you tackle it in the hot part of the day you’ll need plenty
of water. And,” the storekeeper added with a whimsical half-smile,
“the hot part of the day is any time between sunrise and dark. It does
get awful hot down in there! I don’t mean to knock my own district,”
he added, “but I don’t like to see any one start down the canyon
without knowing about what to expect. Then, if they want to go, that’s
their business.”
“That’s the way to look at it,” Rawley agreed. “I expect you’ve
been here a good while, haven’t you?”
The storekeeper wiped a fresh collection of beads from his
forehead. He looked up and down the canyon rather wistfully.
“About as many years as you are old,” he said quietly. “I came in
here twenty-five years ago.”
Rawley laughed. “I was about a year old when you landed. Seems
a long while back, to me.” He stepped on the starter, waved his hand
to the storekeeper and went grinding away down the steep trail
through the loose sand. Johnny Buffalo, sitting beside him, lifted a
hand and laid it on his arm.
“Stop! He calls,” he said.
Rawley stopped the car, his head tilted outward, looking back. The
storekeeper was coming down the trail toward them.
“I forgot to tell you there’s a bad Indian loose in the hills
somewhere along the river,” he panted when he came up. “He’s
waylaid a couple of prospectors that we know of. A blood feud
against the whites, the Indians tell me. You may not run across him
at all, but it will be just as well to keep an eye out.”
“What’s his name?” Johnny Buffalo turned his head and stared
hard at the other.
“His name’s Queo. He’s middle-aged—somewhere in the late
forties, I should say. Medium-sized and kind of stocky built. He’ll kill
to get grub or tobacco. Seeing there’s two of you he might not try
anything, but I’d be careful, if I were in your place. There’s a price on
his head, so if he tries any tricks—” He waved his hand and grinned
expressively as he turned back to the store.
“He is older than that man thinks,” said Johnny Buffalo after a
silence. “Queo has almost as many years as I have. When we were
children we fought. He is bad. For him to kill is pleasure, but he is a
coward.”
“If there is a price on his head he has probably left the country,”
Rawley remarked indifferently. “Old-timers are fine people, most of
them. But they do like to tell it wild to tenderfeet. I suppose that’s
human nature.”
Johnny Buffalo did not argue the point. He seemed content to
gaze at the hills in the effort to locate old landmarks. And as for
Rawley himself, his mind was wholly absorbed by his mission into
the country, which he had dreamed of for more than a month. There
had been some delay in getting started. First, he could not well
curtail the length of his visit with his mother, in spite of the fact that
they seemed to have little in common. Then he thought it wise to
make the trip to Kingman and report upon a property there which
was about to be sold for a good-sized fortune. The job netted him
several hundred dollars, which he was likely to need. Wherefore he
had of necessity had plenty of time to dream over his own fortune
which might be lying in the hills—“In the cleft of the jagged rocks”—
waiting for him to find it.
Just at first he had been somewhat skeptical. Fifty years is a long
time for gold to remain hidden in the hills of a mining country so rich
as Nevada, without some prospector discovering it. But Johnny
Buffalo believed. Whether his belief was based solely upon his faith
in his sergeant, Rawley could not determine. But Johnny Buffalo had
a very plausible argument in favor of the gold remaining where
Grandfather King had left it in the underground stream.
The fact that Rawley was exhorted to “take victuals for the
journey” meant a distance of a good many miles, perhaps, which
they must travel from El Dorado. Then, they were to go to the top of
a very high mountain and pass over on the other side. Johnny
Buffalo argued that the start was to be made from El Dorado merely
because the mountain would be most visible from that point. It would
be rough country, he contended. The code mentioned cliffs and great
heaps of stones and clefts in jagged rocks, with a deep pit, “Hid from
the eyes of all living,” for the final goal. He thought it more than likely
that Grandfather King’s gold mine was still undiscovered. And toward
the last, Rawley had been much more inclined to believe him. He
had read diligently all the mining information he could get concerning
this particular district, as far back as the records went. Nowhere was
any mention made of such a rich placer discovery on—or in—a
mountain.
He was thinking all this as he drove the devious twistings and
turnings of the canyon road. Another mine or two they passed; then,
nosing carefully down a hill steeper than the others, they turned
sharply to the left and were in the final discomfort of the “wash.” A
veritable sweat box it was on this particular hot afternoon in July. The
baked, barren hills rose close on either side. Like a deep, gravelly
river bed long since gone dry, the wash sloped steeply down toward
the Colorado. Rawley could readily understand now the solicitude of
the storekeeper. The return was quite likely to be a time of
tribulation.
He had expected to come upon a camp of some sort. But the
canyon opened bleakly to the river, the hot sand of its floor sloping
steeply to meet the lapping waves of the turgid stream. At the
water’s edge, on the first high ground of the bank, were ruins of an
old stamp mill, which might have been built ten years ago or a
hundred, so far as looks went.
He left the car and climbed upon the cement floor of the old mill.
What at first had seemed to be a greater extension of the plant he
now discovered was a walled roadway winding up to the crest of the
hill. He swung about and gazed to the northward, as the Bible code
had commanded that he should travel. A mile or so up the river were
the walls of a deep canyon,—Black Canyon, according to his map.
Farther away, set back from the river a mile, perhaps two miles, a
sharp-pointed hill shouldered up above its fellows. This seemed to
be the highest mountain, so far as he could see, in that direction. If
that were the “great and high mountain” described in the code, their
journey would not be so long as Johnny Buffalo anticipated.
The nearer view was desolation simmering in the heat. A hundred
yards away, on the opposite bank of the wash, the forlorn ruins of a
cabin or two gave melancholy evidence that here men had once
worked and laughed and loved—perchance. He looked at the
furnace yawning beside him, and at the muddy water swirling in
drunken haste just below. It might have been just here that his
grandfather had landed from the steamboat Gila and had watched
the lovely young half-breed girl in the crowd come to welcome the
boat and passengers.
He started when Johnny Buffalo spoke at his elbow. How the
Indian had reached that spot unheard and unseen Rawley did not
know. Johnny Buffalo was pointing to the north.
“I think that high mountain is where we must go,” he said. “It is
one day’s travel. We can go to-day when the sun is behind the
mountains, and we can walk until the stars are here. Very early in the
morning we can walk again, and before it is too hot we can reach the
trees where it will be cool.”
“We have a lot of grub and things in the car,” Rawley objected. “It
seems to me that it wouldn’t be a bad plan to carry the stuff up here
and cache it somewhere in this old mill. Then if your friend Queo
should show up, there won’t be so much for him to steal. And if we
want to make a camp on the mountain, we can come down here and
carry the stuff up as we need it. There’s a hundred dollars’ worth of
outfit in that car, Johnny,” he added frugally. “I’m all for keeping it for
ourselves.”
Johnny Buffalo looked at the mountain, and he looked down at the
car,—and then grunted a reluctant acquiescence. Rawley laughed at
him.
“That’s all right—the mountain won’t run away over night,” he
bantered, slapping his hand down on Johnny Buffalo’s shoulder with
an affectionate familiarity bred in the past month. “I’ve been juggling
that car over the desert trails since sunrise, and I wouldn’t object to
taking it easy for a few hours.”
Johnny Buffalo said no more but began helping to unload the car.
It was he who chose the trail by which they carried the loads to the
upper level, cement-floored, where no tracks would show. He chose
a hiding place beneath the wreckage of some machinery that had
fallen against the bank in such a way that an open space was left
beneath, large enough to hold their outfit.
A huge rattlesnake protested stridently against being disturbed.
Rawley drew his automatic, meaning to shoot it; but Johnny Buffalo
stopped him with a warning gesture, and himself killed the snake
with a rock. While it was still writhing with a smashed head, he
picked it up by the tail, took a long step or two and heaved it into the
river, grinning his satisfaction over a deed well done.
Rawley, standing back watching him, had a swift vision of the old
Indian paddling solemnly about the yard near the west wing. There
he was an incongruous figure amongst the syringas and the roses.
Here, although he had discarded the showy fringed buckskin for the
orthodox brown khaki clothes of the desert, he somehow fitted into
his surroundings and became a part of the wilderness itself. Johnny
Buffalo was assuredly coming into his own.
CHAPTER SIX
TRAILS MEET
By sunrise they were ready for the trail, light packs and filled
canteens slung upon their shoulders. The car was backed against
the bluff that would shade it from the scorching sunlight from early
afternoon to sundown. Beside it were the embers of a mesquite-
wood fire where they had boiled coffee and fried bacon in the cool of
dawn. As a safeguard against the loss of his car, Rawley had
disconnected the breaker points from the distributor and carried
them, carefully wrapped, in his pocket. There would be no moving of
the car under its own power until the points were replaced. And
Johnny Buffalo had advised leaving a few things in the car, to ward
off suspicion that their outfit had been cached. Furthermore, he had
cunningly obliterated their tracks through the deep, fine sand to the
ruins of the stamp mill. Even the keen, predatory eyes of an outlaw
Indian could scarcely distinguish any trace of their many trips that
way.
They crossed the wash, turned into the remnant of an old road
leading up the bank to the level above, and followed a trail up the
river. Once Johnny Buffalo stopped and pointed down the bank.
“The ferryboat went there,” he explained. “Much land has been
eaten by the river since last I saw this place. Many houses stood
here. They are gone. All is gone. My people are gone, like the town.
Of Queo only have I heard, and him the white men hunt as they hunt
the wolf.”
Rawley nodded, having no words for what he felt. There was
something inexpressibly melancholy in this desolation where his
grandfather had found riotous life. Of the fortunes gathered here, the
fortunes lost—of the hopes fulfilled and the hopes crushed slowly in
long, monotonous days of toil and disappointment—what man could
tell? Only the river, rushing heedlessly past as it had hurried, all
those years ago, to meet the lumbering little river boats struggling
against its current with their burden of human emotions, only the
river might have told how the town was born,—and how it had died.
Or the grim hills standing there as they had stood since the land was
in the making, looking down with saturnine calm upon the puny
endeavors of men whose lives would soon enough cease upon earth
and be forgotten. Rawley’s boot toe struck against something in the
loose gravel,—a child’s shoe with the toe worn to a gaping mouth,
the heel worn down to the last on the outer edge: dry as a bleached
bone, warped by many a storm, blackened, doleful. Even a young
man setting out in quest of his fortune, with a picturesque secret
code in his pocket, may be forgiven for sending a thought after the
child who had scuffed that coarse little shoe down here in El Dorado.
But presently Johnny Buffalo, leading the way briskly, his sharp
old eyes taking in everything within their range as if he were eagerly
verifying his memories of the place, turned from the trail along the
river and entered the hills. His moccasined feet clung tenaciously to
the steep places where Rawley’s high-laced mining boots slipped.
The sun rays struck them fiercely and the “little stinging gnats” which
Grandfather King had mentioned in his diary were there to pester
them, poising vibrantly just before the eyes as if they waited only the
opportunity to dart between the lids.
The thought that perhaps his grandfather had come that way, fifty
years ago, filled the toil of climbing up the long gully with a peculiar
interest. Fifty years ago these hills must have looked much the
same. Fifty years ago, the prospect holes they passed occasionally
may have been fresh-turned earth and rocks. Men searching for rich
silver and gold might have been seen plodding along the hillsides;
but the hills themselves could not have changed much. His
grandfather had looked upon all this, and had divided his thoughts,
perhaps, between the gold and his latest infatuation, the half-breed
girl, Anita. And suddenly Rawley put a vague speculation into words:
“Hey, Johnny! Here’s a good place to make a smoke, in the
shade.” He waited until the Indian had retraced the dozen steps
between them. “Johnny, there was a beautiful half-breed girl here,
when Grandfather made his last trip up the river. She was half
Spanish. My grandfather mentioned her once or twice in his diary.
Do you remember her?”
“There were many beautiful girls in my tribe,” Johnny Buffalo
retorted drily. “What name did he call her?”
“Anita. It’s a pretty name, and it proves the Spanish, I should say.”
The old man stared at the opposite slope. His mouth grew thin-
lipped and stern.
“My uncle, the chief, was betrayed in his old age. His youngest
squaw loved a Spanish man with noble look. I have the tale from my
older brothers, who told me. The child she bore was the child of the
Spanish gentleman. My uncle’s youngest squaw—died.” Johnny
Buffalo paused significantly. “The child was given to my mother to
keep. Her name was Anita. She was very beautiful. I remember.
Many visits Anita made with friends near this place. I think she is the
same. It was not good for my sergeant to look upon her with love. I
have heard my brothers whisper that Anita looked with soft eyes
upon the white soldiers.”
Rawley’s young sympathies suffered a definite revulsion. If his
grandfather’s dulce corazon were a coquette, her fruitless waiting for
his return was not so beautifully tragic after all. There were other
white soldiers stationed along the river, Rawley remembered, with a
curl of the lip. His romantic imagination had not balked at the savage
blood in her veins, since she was a beauty of fifty years ago. But he
was a sturdy-souled youth with very old-fashioned notions
concerning virtue. He finished his smoke and went on, feeling
cheated by the cold facts he had almost forced from Johnny Buffalo.
They reached the head of that gulch, climbed a steep, high ridge
where they must use hands as well as feet in the climbing, and dug
heels into the earth in a descent even steeper. Rawley told himself
once that he would just as soon start out to follow a crow through
this country as to follow Johnny Buffalo. One word had evidently
been omitted from the Indian’s English education by Grandfather
King,—the word “detour.” Rawley thought of the straight-forward
march of locusts he had once read about and wondered if Johnny
Buffalo had taken lessons from them in his youth.
However, he consoled himself with the thought that a straight line
to the mountain would undoubtedly shorten the distance. If the
Indian could climb sneer walls of rock like a lizard, Rawley would
attempt to follow. And they would ultimately arrive at their
destination, though the glimpse he had obtained of the mountain
from the ridge they had just crossed failed to confirm Johnny
Buffalo’s assertion that it was one day’s travel. They had been
walking three hours by Rawley’s watch, and the mountain looked
even farther away than from El Dorado. But Johnny Buffalo was so
evidently enjoying every minute of the hike through his native hills
that Rawley could not bear to spoil his pleasure by even hinting that
he was blazing a mighty rough trail.
They were working up another tortuous ravine where not even
Johnny Buffalo could always keep a straight line by the sun. In
places the walls overhung the gulch in shelving, weather-worn cliffs
of soft limestone. Bowlders washed down from the heights made
slow going, because they were half the time climbing over or around
some huge obstruction; and because of the rattlesnakes they must
look well where a hand or a foot was laid. Johnny Buffalo was still in
the lead; and Rawley, for all his youth and splendid stamina was not
finding the Indian too slow a pacemaker. Indeed, he was perfectly
satisfied when the dozen feet between them did not lengthen to
fifteen or twenty.
The mounting sun made the heat in that gully a terrific thing to
endure. But the Indian did not lift the canteen to his mouth; nor did
Rawley. Both had learned the foolishness of drinking too freely at the
beginning of a journey. So, when Johnny Buffalo stopped suddenly
in the act of passing around a jutting ledge, Rawley halted in his
tracks and waited to see what was the reason.
The Indian glanced back at him and crooked a forefinger. Rawley
set one foot carefully between two rocks, planted the other as
circumspectly, and so, without a sound, stole up to Johnny Buffalo’s
side. Johnny waited until their shoulders touched then leaned
forward and pointed.
Up on the ridge a couple of hundred yards before them, a man
moved crouching behind a bush, came into the open, bent lower and
peered downward. His actions were stealthy; his whole manner
inexpressibly furtive. His back was toward them, and the ridge itself
hid the thing he was stalking.
“He’s after a deer, maybe. Or a mountain sheep,” Rawley
whispered, when the man laid a rifle across a rock and settled lower
on his haunches.
“Still, it is well that we see what he sees,” Johnny Buffalo
whispered back. “We will stalk him as he stalks his kill.”
The Indian squirmed his shoulder out of the strap sling that held
his rifle in its case behind him. With seeming deliberation, yet with
speed he uncased the weapon, worked the lever gently to make sure
the gun was chamber loaded, and motioned Rawley to follow him.
In the hills the old man had somehow slipped into the leadership,
and now Rawley obeyed him without a word. They stole up the side
of the gulch where the man on the ridge could not discover them
without turning completely around; which would destroy his position
beside the rock and risk the loss of a shot at his game. He seemed
wholly absorbed in watching something on the farther side of the
ridge, and it did not seem likely that he would hear them.
A little farther up, a ledge cutting across the head of the gulch hid
him completely from the two. An impulse seized Rawley to cross the
gulch there and to climb the ridge farther on, nearer the spot which
the man had seemed to be watching. He caught the attention of
Johnny Buffalo, whispered to him his desire, and received a nod of
understanding and consent. Johnny would keep straight on, and so
come up behind the fellow.
Unaccountably, Rawley wanted to hurry. He wanted to see the
man’s quarry before a shot was fired. So, when a wrinkle in the ridge
made easy climbing and afforded concealment, he went up a tiny
gully, digging in his toes and trying to keep in the soft ground so that
sliding rocks could not betray him.
Unexpectedly the deep wrinkle brought him up to a notch in the
ridge, beyond which another gully led steeply downward.
Immediately beneath him a narrow trail wound sinuously, climbing
just beyond around the point of another hill. He could not see the
man up on the ridge, but he could not doubt that the rifle was aimed
at some point along this trail. He was standing on a rock,
reconnoitering and expecting every moment to hear a shot, when the
unmistakable sound of voices came up to him from somewhere
below. He listened, his glance going from the ridge to the bit of trail
that showed farther away on the point of the opposite hill. The
thought flashed through his mind that the man with the rifle could
easily have seen persons coming around that point; that he must be
lying in wait. Whoever it was coming, they must pass along the trail
directly beneath the watcher on the ridge. It would be an easy rifle
shot; a matter of no more than a hundred yards downhill.
He stepped down off the rock and started running down the steep
gully to the trail. He was, he judged, fully a hundred yards up the trail
from where the man was watching above. He did not know who was
coming; it did not matter. It was an ambush, and he meant to spoil it.
So he came hurtling down the steep declivity, the lower third of which
was steeper than he suspected. Had he made an appointment with
the travelers to meet them at that spot, he could not possibly have
kept it more punctually. For he slid down a ten-foot bank of loose
earth and arrived sitting upright in the trail immediately under the
nose of a bald-faced burro with a distended pack half covering it
from sight.
There was no time for ceremony. Rawley flung up his arms and
shooed the astonished animal back against another burro, so
precipitately that he crowded it completely off the trail and down the
steep bank. Rawley heard the sullen thud of the landing as he
scrambled to his knees, glancing apprehensively over his shoulder
as he did so. There had been no shot fired, but he could not be
certain that the small flurry in the trail had been unobserved.
“Get back, around the turn!” he commanded guardedly and drove
before him the two women who had been walking behind the burros.
The first, a fat old squaw with gray bangs hanging straight down to
her eyebrows, scuttled for cover, the lead burro crowding past her
and neatly overturning her in the trail. But a slim girl in khaki
breeches and high-laced boots stood her ground, eyeing him with a
slight frown from under a light gray Stetson hat.
“Get back, I say! A man on the ridge is watching this trail with a
rifle across a rock. It may be Queo—get back!” He did not stop with
words. He took the girl by the arm and bustled her forcibly around
the sharp kink in the trail that would, he hoped, effectually hide them
from the ridge.
“Are you quite insane?” The girl twitched her arm out of his grasp.
“Or is this a joke you are perpetrating on the natives? I must say I fail
to see the humor of it.”
“Climb that gully to the top and sneak along the ridge a couple of
hundred yards, and you will see the point of the joke,” Rawley
retorted with an access of dignity, perhaps to cover the extreme
informality of his arrival.
“And why should any one—even Queo—want to shoot us?” True
to her sex, the girl was refusing to abdicate her first position in the
matter.
“How should I know? He may not be watching for you, particularly.
From the ridge he probably saw your pack train around the turn
above here, and he may have thought you were prospectors. I don’t
know; I’m only guessing. What I do know is what I saw: a man with a
rifle laid across a rock, up there, watching this trail. It may not be you
he’s after; but I wouldn’t deliberately walk into range just to find out.”
“What would you do, then? Stay here forever?”
“Until my partner and I eliminate the risk, you’d better stay here.”
Rawley’s tone was masterful. “I only came down to warn whoever
was coming—walking into an ambush.”
The girl eyed him speculatively, with an exasperating little smile.
“It all sounds very thrilling; very tenderfooty indeed. And in the
meantime, there’s poor old Deacon down there on his back in the
ditch. Do you always—er—arrive like that?”
Rawley turned his back on her indignantly and discovered the old
squaw sitting solidly where the lead burro had placed her. She was
very fat, and she filled that portion of the trail which she occupied.
The red bandana was pushed back on her head, and her gray
curtain of bangs was parted rakishly on one side. She was staring at
Rawley fixedly, a look of terror in her eyes.
He went to her, meaning to help her up. Now that he recalled that
first panicky moment, he remembered that the burro had deposited
her with some force in her present position. She might be hurt.
But the old squaw put up her hands before her, palms out to ward
him off. She cried out, a shrill expostulation in her own tongue which
caused the girl to swing round quickly and hurry toward her.
“No, no! He isn’t a ghost! Whatever made you think of such a
thing? He doesn’t mean to harm you—no, he is not a spirit. He
merely fell down hill, and he wants to help you up. Are you hurt—
Grandmother?” Her clear, gray-brown eyes went quickly, defiantly to
Rawley’s face.
That young man could not repress a startled look, which traveled
from the slim girl, indubitably white, to the squaw whimpering in the
trail. She must be trying her own hand at a joke, he thought, just to
break even with his fancied presumption in halting their leisurely
progress down the trail.
From up on the ridge a rifle cracked. The three turned heads
toward the thin, sinister report. They waited motionless for a
moment. Then the girl spoke.
“That wasn’t fired in our direction,” she said, and immediately
there came the sound of another shot. “And that’s not the same
gun,” she added. “That sounds like an old-fashioned gun shooting
black powder. Didn’t you hear the pow-w of it?”
“That would be Johnny Buffalo—my Indian partner,” said Rawley.
“You folks stay here. I’m going back up there and see what’s doing.”
“Is that necessary?” The girl looked at him quickly. “I think you
ought to help turn Deacon right side up before you go.” She leaned
sidewise and peered down over the bank. “He’s in an awful mess.
His pack is wedged between two bowlders, and his legs are sticking
straight up in the air.”
Rawley sent a hasty glance down the bank. “He’s all right—he’s
flopping his ears,” he observed reassuringly. “I’ll be back just as soon
as I see how Johnny Buffalo is making out. That fellow may have got
him. You stay back here out of sight. Promise me.” He looked at her
earnestly, as if by the force of his will he would compel obedience.
Her eyes evaded the meeting. “Pickles will have to be rounded
up,” she said. “He’s probably halfway to Nelson by this time. And
there’s Grandmother to think of.”
“Well, you think of those things until I get back,” he said, with a
swift smile. “I can’t leave my partner to shoot it out alone.”
CHAPTER SEVEN
NEVADA
He ran to the point of rocks, gathered himself together and
cleared the trail and the open space beyond in one leap. How he got
up the steep bank he never remembered afterward. He only knew
that he heard the sharp crack of the first rifle again as he was
sprinting up the little gully that had concealed his descent. He gained
the top, stopped to get his bearings more accurately and made his
way toward the spot where he had seen the man with the rifle.
It occurred to him that he had best approach the spot from the
shelter of the ledge where he had separated from Johnny Buffalo. At
that point he could pick up the Indian’s tracks and follow them, so
saving time in the long run.
Johnny Buffalo’s moccasins left little trace in the gravelly soil. But
here and there they left a mark, and Rawley got the direction and
hurried on. Fifty yards farther up the ridge he glimpsed something
yellowish-brown against a small juniper. A few feet farther, he saw
that it was Johnny Buffalo, lying on his face, one arm thrown outward
with the hand still grasping the stock of his rifle.
He snatched up the rifle, crouched beside the Indian and
searched the neighborhood with his eyes, trying to get a sight of the
killer. In a moment he spied him, away down the deep ravine up
which he and Johnny Buffalo had toiled not half an hour before. The
man was running. Rawley raised the rifle to his shoulder, took careful
aim and fired, but he had small hope of hitting his target at that
distance.
At the sound of the shot so close above him, Johnny Buffalo
stirred uneasily, as if disturbed in his sleep. The man in the distance
ducked out of sight amongst the bowlders; and that was the last
Rawley saw of him at that time.
“I must apologize for not taking you more seriously when you
warned me,” said the girl, just behind him. “Is this—?”
“My partner, Johnny Buffalo. He isn’t dead—he moved, just now—
but I’m afraid he’s badly hurt.” Rawley lifted anxious blue eyes to her
face.
“We can carry him down to the trail. Then, if Deacon is all right
when we get him up, we can put your partner on him and pack him
home. It’s only a mile or so.”
“It might be better to take him to Nelson,” Rawley amended the
suggestion. “I could get a car there and take him on to Las Vegas,
probably. Or some mine will have a doctor.”
“It’s farther—and the heat, with the long ride, would probably finish
him,” the girl pointed out bluntly. “On the other hand, a mile on the
burro will get him home, where it’s cool and we can see how badly
he’s hurt. And then, if he needs hospital care, Uncle Peter can take
him down to Needles in the launch, this evening when it’s cool. I
really don’t mean to be disagreeable and argumentative, but it
seems to me that will be much the more comfortable plan for him.
And I can’t help feeling responsible, in a way. I suppose he was
trying to protect us, when he was shot.”
Rawley looked up from an amateurish examination of the old man.
The bullet wound was in the shoulder, and he was hoping that it was
high enough so that the lung was not injured. His flask of brandy,
placed at Johnny’s lips, brought a gulp and a gasp. The black eyes
opened, looked from Rawley to the girl and closed again.
“There! I believe he’s going to be all right,” the girl declared
optimistically. “I’ll take his feet, and you carry his shoulders. When
we get him down to the trail, I’ll have Grandmother look after him
until we get the burros straightened out. Queo—or whoever it was—
did you see him?”
Rawley waved a hand toward the rocky ravine. “You heard me
shoot,” he reminded her. “Missed him—with that heirloom Johnny
carries. He was running like a jackrabbit when I saw him last. Well, I
think you’re right—but I hate to trouble you folks. Though I’d trouble
the president himself, for Johnny Buffalo’s sake.”
“It’s a strange name,” she remarked irrelevantly, stooping and
making ready to lift his knees. “He must be a Northern Indian.”
“Born in this district,” Rawley told her. “Grandfather found him in
the desert when he was a kid. I suppose he gave him the name—
regardless.”
Until they reached the trail there was no further talk, their breath
being needed for something more important. They laid the injured
man down in the shade of a greasewood, and the girl immediately
left to bring the old squaw. She was no sooner gone than Johnny
Buffalo opened his eyes.
“It was Queo,” he said, huskily whispering. “I thought he was
shooting at you. I tried to kill him. But the damn gun is old—old. It
struck me hard. I did not shoot straight. I did not kill him. Queo
looked, he saw me and he shot as he ran away. The gun has killed
many—but I am old—”
“You’re all right,” Rawley interrupted. “Quit blaming yourself. You
saved two women by shooting when you did. Queo was afraid to
stay and shoot again when he knew there was a gun at his back. He
has gone down the ravine where we came up.”
“Who was the white girl?” Even Johnny Buffalo betrayed a very
masculine interest, Rawley observed, grinning inwardly. But he only
said:
“I don’t know. She was on the trail, with an old squaw and two
burros. It was they that Queo was laying for, evidently. Don’t try to
talk any more, till I get you where we can look after you properly.
Where’s your pack? I didn’t see it, up there.”
“It is hidden in the juniper. I did not want to fight with a load on my
back.”
“All right. Don’t talk any more. We’ll fix you up, all fine as silk.”
The girl was returning, and after her waddled the squaw, reluctant,
looking ready to retreat at the first suspicious move. Rawley stood
aside while the girl gave her brief directions in Indian,—so that
Johnny Buffalo could understand, Rawley shrewdly suspected, and
thanked her with his eyes. The squaw sidled past Rawley and sat
down on the bank, still staring at him fixedly. His abrupt appearance
and the consequent stampede of the burros had evidently impressed
her unfavorably. The look she bestowed upon Johnny Buffalo was
more casual. He was an Indian and therefore understandable, it
seemed.
The narrow canyon lay sun-baked and peaceful to the hard blue
of the sky. With the lightness which came of removing the pack from
his shoulders, Rawley walked up the trail and around the turn to
where the burro called Deacon still lay patiently on his back in the
narrow watercourse below the trail. He slid down the bank and
inspected the lashings of the pack.
“We use what is called the squaw hitch,” the girl informed him
from the trail just above his head. “If you cut that forward rope I think
you can loosen the whole thing. The knot is on top of the pack, and
of course Deacon’s lying on it.” A moment later she added, “I’ll go
after Pickles, unless I can be of some use to you.”
Privately, Rawley thought that she was useful as a relief to the
eyes, if nothing else. But he told her that he could get along all right,
and let her go. The girl piqued his interest; she was undoubtedly
beautiful, with her slim, erect figure, her clear, hazel eyes with
straight eyebrows, heavy lashes, and her lips that were firm for all
their soft curves. But Johnny Buffalo’s life might be hanging on
Rawley’s haste. However beautiful, however much she might attract
his interest, no girl could tempt him from the chief issue.
By the time she returned with Pickles, Rawley had retrieved
Deacon and was gone down the trail with him. She came up in time
to help him lift Johnny Buffalo on the burro and tie him there with the
pack rope. She was efficient as a man, and almost as strong,
Rawley observed. And although she treated the squaw with careful
deference, she was plainly the head of their little expedition,—and
the shoulders and the brains.
Only once did the squaw speak on the way to the river. The girl
was walking alongside Deacon, steadying Johnny Buffalo on that
side while Rawley held the other. They were talking easily now, of
impersonal things; and when, on a short climb, the burro stepped
sharply to one side and Johnny Buffalo lurched toward the girl,
Rawley slipped his arm farther behind the Indian. His fingers clasped
for an instant the girl’s hand. The squaw, walking heavily behind,
saw the brief contact.

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Reducing Inequalities: A Challenge for

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Part I Inequality and Poverty in European Union 11

2 Disposable Income Inequality, Cohesion

3 Drivers of Growing Income Inequalities in OECD

4 Unemployment, Precariousness and Poverty

5 Distributional and Categorical Inequalities in Europe:

6 Income Poverty in the EU: What Do We

7 Poverty and Social Exclusion Indicators

8 Inequality of Outcomes and Opportunities

Part II European Union against Inequality 135

9 The European Union Social Tools in Question 137

10 European Union Policy on Gender Equality:

11 European Union and Human Rights: Reducing

12 Normative Arguments for a European Social Union 187

13 Hayek’s Trap and the European Utopia We Need 213

14 Wealth, Taxation and Inequality 225

15 Conclusion: Back to the Future – Towards a European

Fig. 2.1 Development of inequality in the EU (2005–2015).

Fig. 3.4 Trends in redistribution. Source: OECD Income

‘Households making ends meet with great difficulty’

EU-SILC 2014 UDB August 2016.

Fig. 7.1 Elements of the EU poverty and social exclusion target

Table 2.1 Level and change in per capita income at purchasing

Inequality is a major issue today in public debates, especially since 2008

R.M. Carmo (*)

© The Author(s) 2018 1

within a community are strongly linked to the development and the

European Commission. Finally, this last institution has incentive tools

role in social issues in the future. In addition to the heterogeneity of the

exclusion, education and social mobility—are linked and interconnected.

c­ ountries are more affected by income poverty and material difficulties.

responses to the social consequences of the crisis. But the institutions of

of the economy from public interventionism. According to Van Parijs,

Falkner, G. (2010). European Union. In F. Castles, S. Leibfried, H. Obinger, &

Renato Miguel Carmo is an assistant professor at the Department of Sociology

Márton Medgyesi is a senior researcher at TÁRKI Social Research Institute and

© The Author(s) 2018 13

inequality and warned about their consequences. Even mainstream

2.2 The Dimensions of European Inequality

rich or do they want to reduce the absolute difference? In the context of

(A) Disparities between EU Member States measured in terms of aver-

The reduction of disparities between countries (dimension A) and

funds. There are regular reports by the EU on development of regional

2.2.1 Divergence and Convergence5

2.2.2 Regional Cohesion

2.2.3 National Inequality

Recently, concerns about national inequality have increased. Even inter-

Fig. 2.1 Development of inequality in the EU (2005–2015)

2.2.4 European-Wide Inequality

2 Disposable Income Inequality, Cohesion

3 Drivers of Growing Income Inequalities in OECD

4 Unemployment, Precariousness and Poverty

5 Distributional and Categorical Inequalities in Europe:

6 Income Poverty in the EU: What Do We

7 Poverty and Social Exclusion Indicators

8 Inequality of Outcomes and Opportunities

10 European Union Policy on Gender Equality:

11 European Union and Human Rights: Reducing

15 Conclusion: Back to the Future – Towards a European

c ountries are more affected by income poverty and material difficulties.

2.2 The Dimensions of European Inequality

2.2.1 Divergence and Convergence5

2.2.2 Regional Cohesion

2.2.3 National Inequality

2.2.4 European-Wide Inequality

2.3 The Development of European Inequality

2.4 Crisis and Inequality

3.2 Level and Trends

3.2.2 Has the Gap Between Rich and Poor Widened?