The Oxford Martin Programme on

Inequality & Prosperity

The Challenge

Income inequality has increased substantially in many OECD countries in recent decades. As well as concerns about equity and fairness, inequality presents a major threat to long-term growth and prosperity.

Technological change, globalization, changes in labour market institutions, the role of finance and ‘top pay’, weakening redistribution of income, greater concentration of wealth and the income arising from it, are all factors that contribute to rising inequality.

While researchers disagree on the relative contribution of these elements – not least because they are all inter-related - the search for effective responses is still at an early stage, and even international organisations like the OECD and IMF are advancing very broad recommendations, such as the prioritization of education and training. There is, therefore, an urgent need to understand these issues better and identify a coherent set of responses that would address rising inequality in a way that promotes inclusive growth.

A team led by Professor Brian Nolan is investigating the various drivers of economic inequality, the ways inequality impacts on growth and prosperity, and what can be done about. Core members of the research team are Tim Goedeme, Helen Kowalewska, Marii Paskov, Luis Valenzuela and David Weisstanner.

The programme directly addresses current concerns about rising inequality and its impacts; yields important insights into the drivers of increasing inequality and its effects; and aims to identify a coherent set of responses aimed at promoting inclusive growth and prosperity. While primarily focused on the currently rich countries, it seeks to incorporate key trends in, and implications for, those seeking to join them.

This programme was established in 2016 as part of the Oxford Martin School’s research partnership with Citi, to look at promoting inclusive growth. It forms a core element of research in the Institute for New Economic Thinking at the Oxford Martin School on employment, equity and growth.

research themes

Inequality and Rewarding Work

This research stream is teasing out the complex relationships between, the division of national income between labour and capital, personal income inequality, productivity and living standards.

It is deepening understanding of the role of labour market and product market power, exploiting the potential of firm-level data and new analytical approaches. It seeks to find policy levers that can promote inclusive growth and solutions that can sustain high employment without having to accept that much of it will be at low wages, and also to assess the role companies could play in responding to rising inequality and promoting inclusive growth.

Inequality, Wealth and Opportunity

This stream of research is probing the relationship between increasing income inequality, the concentration of wealth towards the top, and opportunity.

It is assessing ways in which wealth and the income arising from it can be spread more widely and what avenues are open to the state to achieve this. It is also identifying core elements in the transmission of economic advantage and disadvantage across generations and considering how policies can ensure that the workforce of the future can approach its full productive capacity, underpinning prosperity for ordinary families.

Inequality, Taxation and Social Transfers

The role of the state in redistribution via taxes and transfers is critical to growth and prosperity.

The research is assessing how market income inequality relates to inequality in incomes after taxes and transfers, and how rising inequality has affected those in the middle and lower parts of the distribution in particular. It is identifying how best to strengthen the effectiveness of social transfers for working-age households, and align them with labour market institutions (such as minimum wages) to form a coherent strategy to encourage labour market participation and investment in human capital while supporting living standards.

Inequality and Societal Wellbeing

Income inequality is widely seen as having important consequences for societal wellbeing and the democratic political process, which in turn condition the responses available to promote policies for inclusive growth.

This research stream is studying how income inequality affects individuals’ social trust, their political preferences (such as attitudes towards redistribution) as well as their political behaviour in terms of voter turnout and party support (such as the rise of radical parties). It provides insights into how democracies can cope with the challenge of inclusive growth and prosperity in times of rapid social and political change.

Featured publications

Inequality and Prosperity in the Industrialized World: Addressing a Growing Challenge

This Citi GPS report sets out how income inequality has risen in most OECD countries in recent decades. The recession following the global financial crisis has exacerbated this trend in some of the worst-hit countries, while sometimes interrupting it elsewhere.

This report investigates the forces driving inequality upwards, highlighting the role of technological change, globalisation, deregulation, declining union power, demographic change and weakening redistribution by taxes and transfers.

Download the CIti GPS report
Generating Prosperity for Working Families in Affluent Countries

Rising inequality has become such a widespread concern in rich countries primarily because it is seen to be associated with long-term stagnation in living standards for ordinary working households, compounded by the Great Recession.

This book presents the findings of a comprehensive analysis of performance in improving ordinary living standards over recent decades across the wealthy nations of the OECD. By looking across a broad canvas, the book draws important lessons for how best to pursue the quest for inclusive growth and prosperity.

Buy the book at Oxford University Press