Question

2. Compare and contrast trends in income inequality between 1910 and 2010 in Continental Western European Countries such as France, Germany, Sweden, Denmark, as well as Japan, as a group relative to Anglo-Saxon countries such as Canada, United States, United Kingdom, and Australia. Discuss three periods: Approximately 1910-1940, 1940s-1970s, 1980-2010.

a. What policy differences have been put forward to explain the 1980-2010 period?

b. Does the evolution of inequality in these two groups of countries support the Skill biased technological change argument or the “institutionalist” argument of increasing inequality? (Define both and explain).

c. Are emerging economies following a pattern of income inequality more similar to the Anglo-Saxon countries or continental Europe? Explain.

Answer 1

The Continental Western Europe Countries (A) and Anglo-Saxon Countries (B) have some common Comparable factors. They are listed on the basis of priority which reveals the Economic Status such as Taxes, Social Security, Income levle and Labour Markets. ( Here A and B countries are abbreviated for reference purpose)

On Contrary Let have the breif view on those factors. Anglo-Saxon Countries such as unqiue features as Low taxes, lesser degree of protectable Social Security, Bearable Income equality and Flexible Labor Markets. But Continental Western Europe Countries have High Taxes, Higher degree of protectable Social Security, Zero non-bearable of Income equality and Well Standardized Labor Markets.

Period Wise Reviews on both type of countries:-

1910-1940: 45% income gained in A countries. While in B countries only 40 income.  Then secondly Fixing Minimum Wage policy was not much effected the economic status of their own countries.

1940-1970: 36% income gained in A countries. While in B countries only 34 income. Then secondly Real Minimum Wage grown in large extent in A countries. but It was declined in the B countries

1980-2010: 31% income gained in A countries. While in B countries only 29 income. Then secondly Real Minimum Wage declined in large extent in A countries. but It was grown in the B countries.

The above all facts are predominantly determined by the Effects of World Wars took place between 1914-1945.

a) Monetary and Fiscal Policy differences was adopted to explain the situation in 1980-2010 periods. Either Cut shorting the nominal interest rate of the Govt. bonds or increasing the rates in order to increase or decrease in the money supply.

b) Skill-based Technology was able to cope up with the trending economies of both A and B countries. Skill-based technology was mainly emerged due to Industrial Revolution took place in later 1940s. And also Institutioanal Technology was greatly oriented towards the Rich people interest of growing business as Per capital income increased and Consumer Spending increased at same leve. This applies to both type of countries,

c) All Emerging Economies follows both Economies. As already we discussed the common factors of both type of countries (A & B) influences the adopting the Policies.