Thu, Nov 26, 2015 - Page 15 News List

Of developed areas, southern Europe the least equal: report

Bloomberg

The developed world’s most unequal economies are in struggling southern Europe, closely followed by the US.

That is according to a new report from Morgan Stanley, where analysts looked at indicators including the gender pay gap, involuntary part-time employment and Internet access. The bank also found that the rise of economies such as China and India has helped drive down inequality between countries, even though inequality within many individual countries has grown.

Since the mid-1980s, income inequality has risen the most in Sweden when looking at developed economies. Even after that increase, Sweden — along with the rest of Scandinavia — still had the lowest levels of inequality.

Persistent inequality hurts economic growth over the long run, the bank said.

By hindering access to opportunity, it undermines incentives to work hard, get more education and improve skills. It might undermine trust in policymakers and social institutions, and lead to economic policy solutions such as increased market regulation, protectionism and anti-immigration measures.

“Past generations of middle-class families, emerging from the post-WWII period, could aspire to improving living standards, with a reasonably sized house, a good education for their children” Morgan Stanley economists said in their report on Tuesday. “In contrast, middle-class aspirations are now running up against the wall of job and retirement insecurity.”

Still, some investors are well-positioned to profit from the growing inequality gap.

Greater product differentiation, with more price and quality options at the top and the bottom, would probably continue, Morgan Stanley said.

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