Economics Lecture 4: Labour, Inequality, and Gender

Patterns and Trends

• Topics to be discussed:
  • Patterns and trends in labor, inequality, and gender.
  • 'Mainstream' approaches to labor, inequality, and gender.
  • Alternative approaches focusing on the specificity of labor.
  • Importance of gender considerations.

Why Inequality?

• References to articles and reports discussing economic inequality:
  • Larry Elliott, 21 Jan 2019.
  • Richard Partington, 9 Sep 2019.
  • Financial Times, 5 November 2019.
  • The Economist, 28 November 2019.
  • Felicity Lawrence, The Guardian, 11 Apr 2020.
  • Counterfire, 7 April 2020.
  • The National Union of Public and General Employees (NUPGE), 7 April 2020.
  • Max Fisher and Emma Bubola, New York Times, March 15, 2020.

Global Income Inequality: T0.1/B50 Ratio, 1820-2020

• Comparison of average income of the global top 0.1% to the bottom 50%.
  • 1820: The top 0.1% earned 320 times more than the bottom 50%.
  • 1910: The top 0.1% earned 875 times more than the bottom 50%.
  • 2007: The top 0.1% earned 718 times more than the bottom 50%.
  • 2020: The top 0.1% earned 602 times more than the bottom 50%.
• The graph illustrates the trend of this ratio from 1820 to 2020.

Top 10% Income Shares Across the World, 2021

• Income share of the top 10% varies across different regions:
  • Ranges from 26-40% in some regions.
  • Ranges from 40-43% in some regions.
  • Ranges from 43-46% in some regions.
  • Ranges from 46-49% in some regions.
  • Ranges from 49-83% in some regions.

Bottom 50% Income Shares Across the World, 2021

• Income share of the bottom 50% varies across different regions:
  • Ranges from 3-12% in some regions.
  • Ranges from 12-14% in some regions.
  • Ranges from 14-16% in some regions.
  • Ranges from 16-17% in some regions.
  • Ranges from 17-25% in some regions.

Geographic Breakdown of Global Income Groups in 2021

• Distribution of global income groups across different regions.
• Regions include North America & Oceania, Europe, Russia & Central Asia, MENA, Latin America, Sub-Saharan Africa, China, Other Asia, and India.
• Shares of total population within each income group are compared.
  • From 1% poorest to 0.001% richest.

Global Income Inequality: Between-Country vs Within-Country Inequality (Theil Index), 1820-2020

• Decomposition of global inequality into between-country and within-country components using the Theil Index.
  • 1820: Between-country inequality accounted for 11% of global inequality.
  • 1980: Between-country inequality accounted for 57% of global inequality.
  • 2020: Between-country inequality accounted for 32% of global inequality.
• The graph shows the changing distribution of inequality between countries and within countries from 1820 to 2020.

Global Carbon Inequality, 2019: Emissions by Group

• Carbon emissions per person per year for different income groups.
  • Full population: 6.6 tonnes of CO2e.
  • Bottom 50%: 1.6 tonnes of CO2e.
  • Middle 40%: 3.1 tonnes of CO2e.
  • Top 10%: 31 tonnes of CO2e.
  • Top 1%: 110 tonnes of CO2e.

The Elephant Curve of Global Inequality, 1980-2020

• The Elephant Curve illustrates the cumulated growth of per capita real income between 1980 and 2020 across the global income distribution.
  • The bottom 50% captured 9% of total growth.
  • The top 1% captured 23% of total growth.
• Highlights the rise of emerging countries and the lagging of lower and middle classes of rich countries.

Activity (1)

• Factors explaining the 'elephant curve' of global inequality and growth.
• Link to a Microsoft Forms survey: https://forms.office.com/e/FwCJpbCMSd

The 'Mainstream' Economic Approach to the Labour Market (1)

• Income inequality is multidimensional, and schools of thought in labor economics offer different perspectives.
• 'Mainstream'/'orthodox' neoclassical economics views labor as a commodity, treating the labor market as any other market governed by supply and demand.
• Wages depend on labor demand and supply, reflecting factor earnings with productivity under perfectly competitive markets.

The 'Mainstream' Economic Approach to the Labour Market (2)

• Human capital theory (Becker 1964; Mincer 1974) suggests that inequality stems from skill formation (education, training, etc.).
• Inequality from low wages or unemployment/underemployment can be attributed to institutions, policies, personal choices, or individual failings.
• 'Mainstream'/'orthodox' economists are generally less concerned with inequality.
  • Lucas (2004): economic analysis should prioritize increasing production over focusing on inequality or distribution.

Kuznets (1955) - Inverted-U Shaped Trend

• The Kuznets curve illustrates that as income per capita rises, inequality initially increases but eventually decreases.

Activity (2)

• What makes labor inherently different from other marketable commodities, such as broccoli, fresh fruit, or bags of concrete?
• Link to a Microsoft Forms survey: https://forms.office.com/e/vJkyCwVWzF
• Reference to Charles Chaplin in Modern Times (1936).

Specificity of Labour

• Labor (power) cannot be separated from the laborer.
• Labor (power) cannot be stored.
• Labor is an active, self-conscious factor of production.

Alternatives: Institutional Approaches

• Focus on labor market institutions (labor laws; unionization; collective bargaining) and the weakening of the welfare state.
• Segmented labor market theories: historical emergence and reproduction of labor market structures.
• Governance of firms: global inequality resulting from global value chains and concentration of surplus value in the global North.
• Emphasis on institutional and policy interventions to tackle inequality, contrasting with 'mainstream' approaches.

Female Labor Income Share Across the World, 1990-2020

• Trends in female labor income share across different regions:
  • Asia (excluding China).
  • China.
  • Russia & Central Asia.
  • Latin America.
  • MENA.
  • North America.
  • Sub-Saharan Africa.
  • Western Europe.
• Comparison of income shares across years: 1990, 1995, 2000, 2005, 2010, 2015-2020.

Activity (3)

• Why does gender inequality persist?
• What is distinct about gender in capitalist society?
• Link to a Microsoft Forms survey: https://forms.office.com/e/xRyuwcTi4G

Gender Pay Gap in the UK, 1997-2014 (Hourly Earnings £ Per Hour – Full-Time Workers)

• The gender pay gap amongst those in full-time employment has been declining.
• Little change in the gap in higher paid jobs.
• The gap has narrowed because of the decline in male earnings at the bottom.
• Source: ONS, Annual Survey of Hours and Earnings (ASHE) (2015) data modified from Figure 11.

Gender Differences in Part-Time and Flexible Work in the UK, 2014

• Women make up only 36.7 per cent of full-time workers in the UK.
• For part-time workers, the gender pay gap is significantly higher when compared to full-time men.
• At the current rate of change, it will take 30 to 50 years to eliminate the gender wage gap for full-time workers and 300 years for female part-timers.

Pay Gap Between Mothers and Fathers (A) and Between Singles Without Children, UK 2014

• Gender pay gap for parents widens from the age of 30, illustrating the so-called ‘motherhood pay penalty’.
• For single men and women without children, the gap widens from the age of 40.
• Source: Manning (2015) using LFS data.

Gender Difference in Time Spent in Paid and Unpaid Work, UK in 2008

• Women in the UK on average spend a similar amount of time in total (both unpaid and paid) work to men.
• However, women in the UK spend on average two hours more than men on unpaid work, generally caring for children and carrying out other household work.
• Source: Razzu (2014: 15); OECD Secretariat estimates based on national time-use surveys.

From Labour Market to Labour Regime?

• Alternative approaches highlight the specificity of labour (power).
• Wages are not just costs but also sources of aggregate demand, productivity, and the basis to reproduce labour-power.
• Over-emphasis on the labour ‘market’ underestimates the importance of unpaid work in sustaining the ‘regime’ of labour in capitalist society.