An anatomy of inclusive growth in Europe

This Blueprint offers an in-depth analysis of inequalities of income and wealth in the EU, as well as their causes and consequences.

Publishing date: 27 October 2016
Authors: Zsolt Darvas Guntram B. Wolff

Download

Read the Working Paper 'Some are more equal than others: new estimates of global and regional inequality'.

Access the dataset 'Global and regional Gini coefficients'.

Key findings

Contrary to many perceptions, income inequality in the EU has fallen over the past two decades. In the EU as a whole, and in most EU members, absolute poverty is rare and income inequality is low. Strong welfare states have offered protection against inequality.

However, income inequality has in some cases increased, measured on a country-by-country basis. Unemployment remains high in a number of member states, while the intergenerational divide between the young and the old has widened. Social mobility is weak, in particular in the more unequal economies of southern Europe, limiting opportunities for the children of poor and disadvantaged families.

High inequality can fuel political disenchantment, and may have played a part in the Brexit vote. High inequality and poverty can boost protest votes in referenda and elections.

Technological change and robotisation will not necessarily increase inequality. However, many routine physical and cognitive tasks will be automated, and workers will need creative and social skills.

The link between education and income is weaker in Europe than the USA. In most EU countries, the "skills premium" associated with higher levels of education is falling. However, there is a strong link between family wealth and children's educational attainment - especially in more unequal countries.

It is national governments, not the EU, who can plausibly act. Inclusive growth needs to be at the top of the policy agenda, but relevant powers in welfare and education are largely at national level.

Financial support from the MasterCard Center for Inclusive Growth is gratefully acknowledged.

About the authors

Zsolt Darvas

Zsolt Darvas is a Senior Fellow at Bruegel and a part-time Senior Research Fellow at the Corvinus University of Budapest. He joined Bruegel in 2008 as a Visiting Fellow, and became a Research Fellow in 2009 and a Senior Fellow in 2013.

From 2005 to 2008, he was the Research Advisor of the Argenta Financial Research Group in Budapest. Before that, he worked at the research unit of the Central Bank of Hungary (1994-2005) where he served as Deputy Head.

Zsolt holds a Ph.D. in Economics from Corvinus University of Budapest where he teaches courses in Econometrics but also at other institutions since 1994. His research interests include macroeconomics, international economics, central banking and time series analysis.

Personal website: https://www.darvas.online/
Guntram B. Wolff

Guntram Wolff is a Senior fellow at Bruegel. He is also a Professor of Economics at the Université libre de Bruxelles (ULB).

From 2022-2024, he was the Director and CEO of the German Council on Foreign Relations (DGAP) and from 2013-22 the director of Bruegel. Over his career, he has contributed to research on European political economy, climate policy, geoeconomics, macroeconomics and foreign affairs. His work was published in academic journals such as Nature, Science, Research Policy, Energy Policy, Climate Policy, Journal of European Public Policy, Journal of Banking and Finance. His co-authored book “The macroeconomics of decarbonization” is published in Cambridge University Press.

An experienced public adviser, he has been testifying twice a year since 2013 to the informal European finance ministers’ and central bank governors’ ECOFIN Council meeting on a large variety of topics. He also regularly testifies to the European Parliament, the Bundestag and speaks to corporate boards. In 2020, Business Insider ranked him one of the 28 most influential “power players” in Europe. From 2012-16, he was a member of the French prime minister’s Conseil d’Analyse Economique. In 2018, then IMF managing director Christine Lagarde appointed him to the external advisory group on surveillance to review the Fund’s priorities. In 2021, he was appointed member and co-director to the G20 High level independent panel on pandemic prevention, preparedness and response under the co-chairs Tharman Shanmugaratnam, Lawrence H. Summers and Ngozi Okonjo-Iweala. From 2013-22, he was an advisor to the Mastercard Centre for Inclusive Growth. He is a member of the Bulgarian Council of Economic Analysis, the European Council on Foreign Affairs and advisory board of Elcano. He is also a fellow at the Kiel Institute for the World Economy.

Guntram joined Bruegel from the European Commission, where he worked on the macroeconomics of the euro area and the reform of euro area governance. Prior to joining the Commission, he worked in the research department at the Bundesbank, which he joined after completing his PhD in economics at the University of Bonn. He also worked as an external adviser to the International Monetary Fund. He is fluent in German, English, and French. His work is regularly published and cited in leading media.