Gap between rich and poor widened in most OECD countries

22nd October 2008, Comments 0 comments

A new study shows that inequality has increased in the world’s most industrial nations over the past two decades.

Paris -- The gap between the rich and the poor has widened in most industrial countries over the past two decades, according to a study released Tuesday in Paris by the Organization for Economic Cooperation and Development (OECD).

The study, titled "Growing Unequal." found that the robust economic growth of the past 20 years benefited the rich more than the poor.

In addition, in some countries -- such as the United States, Germany and Norway -- the gap also widened between the rich and the middle class.

One reason for the widening income gap, the study found, was that wages have been improving for well-paid employees, while unemployment rates have risen for less-educated people.

The study also found that relative poverty rates were highest in the United States, Turkey and Mexico and lowest in the Czech Republic, Denmark and Sweden.

"Poverty rates are below average in all Nordic and several continental European countries and above average in southern European countries as well as Ireland, Japan and South Korea," the study said.

Statisticians and economists define poverty according to average incomes. Typically, they set the poverty line at the equivalent of half of the median income in a given country.

The report noted that the young were increasingly more likely to be poor than their elders. Across the OECD, one of eight children were found to be living in poverty in 2005.

"In general, poverty risks for all age groups above 50 have declined, while those for people below that age have risen," it said. "By 2005, children and young adults had poverty rates about 25 percent above the population average while they were close to and below that average, respectively, 20 years ago."

The study found that social mobility was highest in countries where income inequalities were relatively low such as in Denmark and Australia.

Lower social mobility was found in Britain, Italy and, surprisingly, in the US, a country that has traditionally prided itself on enabling its citizens to pull themselves up economically "by their boot straps."

In launching the report in Paris, OECD head Angel Gurria said, "Growing inequality is divisive. It polarizes societies, it divides regions within countries ... Greater income inequality stifles upward mobility between generations, making it harder for talented and hard-working people to get the rewards they deserve."


0 Comments To This Article