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Inequality Chart Of The Day

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Oct 18 2007 12:00am EDT

Inequality Chart of the Day

From Will Wilkinson:

smeeding-inequality.jpg

The Gini coefficient is the generally-accepted standard measure of inequality, and the dark-green bars show the amount of after-tax income inequality in 16 OECD countries (click on the chart for a bigger version). The difference between the bars, shown in light green, is a measure of redistribution, basically: the larger number is the amount of pre-tax income inequality.

As Wilkinson points out, the US has less income inequality, before taxes, than the UK; it's tied with both Germany and Australia. (Yes, Germany – but remember it's still not all that much time since West Germany absorbed East Germany, large parts of which are still very depressed, and that skews things a bit.)

For those of us who laud the Scandinavian model, the numbers for Sweden are worth noting. Sweden is clearly successful in redistributing income, since its after-tax Gini coefficient of 25 is much lower than the 37 seen in the US. But interestingly it seems happy with a lot of before-tax inequality, since the market-income Gini coefficient is a high 46.

(Via Cowen)

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