Income distribution in Europe and the United States

Abstract

This paper assembles empirical evidence about the personal distribution of income in Europe and the United States. It presents data for the distribution in the 1980s, and shows that the US had distinctly higher inequality, largely arising at the bottom of the scale. Within Western Europe, the Scandinavian countries, Benelux and West Germany have less inequality; southern Europe and Ireland have higher inequality. The differences in the distribution between the US and Europe on be sufficient to outweigh differences in average incomes. Treating the European Union as an entity does not indicate that the difference can be explained simply by scale: prototype estimates indicate that the EU is less unequal than the US. The origin of the difference between the US and Europe appears to have been a period of fall ins inequality in the 1970s. The picture changed in the 1980s, and in the UK and Sweden income inequality rose at a more rapid rate than in the US.