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The contributions document how income inequality in the Nordics in various dimensions have increased over recent decades. These developments are put in an international context. Developments in Den ...

The authors propose a policy compact to achieve more inclusive growth in G20 countries so that economic growth regains the ultimate sense of improving all people's lives. Guiding principles are: 1) prosperity is not just about income but about all relevant outcomes of well-being and capabilities to overcome the initial social disadvantage; 2) it is also about including people in participatory decision-making to enhance their dignity and control over their lives; 3) excluding people from reaping the benefits of growth will thwart social cohesion and well-being; 4) integrated policy approaches are needed to achieve inclusive growth, across policy domains and between national and global actions, including responsible management of migratory movements. Concrete policy actions are described that span education, labor, fiscal instruments, public and private governance.

This paper produces a comprehensive assessment of income redistribution to the working-age population, covering OECD countries over the last two decades. Redistribution is quantified as the relative reduction in market income inequality achieved by personal income taxes, employees' social security contributions and cash transfers, based on household-level micro data. A detailed decomposition analysis uncovers the respective roles of size, tax progressivity and transfer targeting for overall redistribution, the respective role of various categories of transfers for transfer redistribution; as well as redistribution for various income groups. The paper shows a widespread decline in redistribution across the OECD, both on average and in the majority of countries for which data going back to the mid-1990s are available. This was primarily associated with a decline in cash transfer redistribution while personal income taxes played a less important and more heterogeneous role across countries. In turn, the decline in the redistributive effect of cash transfers reflected a decline in their size and in particular by less redistributive insurance transfers. In some countries, this was mitigated by more redistributive assistance transfers but the resulting increase in the targeting of total transfers was not sufficient to prevent transfer redistribution from declining.

The capital-output ratio is more than 40% lower in the poor countries than in the richest ones. Comparing TFP in manufacturing and in the economy at large, we show that the Balassa-Samuelson effect explains the bulk of this scarcity: TFP in manufacturing is indeed about 40% lower than TFP in the aggregate economy. This discrepancy is one for one translated into higher prices of equipment goods, which explains that capital is scarce in volume, but not in value terms. This quantifies our interpretation of the Lucas paradox. When focusing on manufacturing, a tradable sector for which relative prices differences should not be essential, the initial paradox is actually turned into an anti-Lucas paradox: it is in the poorest countries that the capital output ratio is higher.We argue that lack of productive infrastructure is essential in explaining this anti-paradox. We finally examine the role of institutional quality. We show that public capital under provision, as reflected in low levels of infrastructure stock, is the key channel through which poor institutions hamper capital accumulation

This Discussion Paper analyses 23 industrial sector in a sample of 51 developed and developing countries. It distinguishes the contribution of five factors: private capital, infrastructure, education, trade integration, and net efficiency. Several relatively small handicaps, combined multiplicatively, can make a country poor or very poor. In average, the average productivity of the industrial sector is indeed the product of about five times 70%. But 0.70 to the power of five is 17%. The least productive country in the sample, Bangladesh, has a productivity level worth about 2% of that of the richest nations. From this perspective, industry is not much different from aggregate GDP such as analysed in Cohen and Soto (2004) where a similar picture emerged The paper then sheds light on the effect of TFP differential between industry and GDP at large on the relative price of manufactured goods. We show that productivity differentials explain about half of the relative price discrepancy. It then analyses the extent to which this is an explanation of the Lucas Paradox. So far as manufacturing is concerned the paper highlights an "anti-Lucas" paradox whereby the capital output ratio is higher in poor countries than in rich countries. This result tends to deflate the theories according to which fear of expropriation is the critical explanation of the low level of capital in the economy at large.