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Earnings and Income Inequality Across Borders Essay

Gottschalk & Smeeding (1997) write that comparisons of different levels of earnings as well as income inequalities in a group of nations are necessary in increasing our understanding of the similarities and dissimilarities between the nations. The authors consider OECD nations, in particular, seeing that it is easy to compare the principal industrialized nations on a variety of factors that may be enlarging the gap between the haves and the have-nots. In other words, the authors would not compare developed nations with the developing ones seeing that the dissimilarities between the two groups are substantial.

Thus, the authors find that inequalities have been on the rise in the developed world since the acceleration of globalization. However, there is no analytical framework thus far to compare all developed nations on the myriad factors that increase inequalities. Mahler (1989) also complains that there are “problems of measurement and definitional consistency” as far as cross-national comparisons of income inequality are concerned. One of these problems is the fact that countries employ different fiscal policies.

Still, Smeeding (2004) maintains that economists must continue to seek ways to effectively compare cross-national data of inequality. Given that the United States has experienced the “highest level of inequality” among

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the OECD nations in recent decades, cross-national comparisons should help the country in reviewing its policies (Smeeding). Burkhauser & Poupore (1997) are similarly interested in understanding the reasons for the high level of inequality in the U. S. , as they compare permanent inequality – i. e.

inequality that persists over time – in Germany and the United States. The results of their cross-national study indicate that perhaps the “smaller social welfare system” of the U. S. is responsible for its high level of inequality (Burkhauser & Poupore). References Burkhauser, R. V. , & Poupore, J. V. (1997, Feb. ). A Cross-National Comparison of Permanent Inequality in the United States and Germany. Review of Economics and Statistics, Vol. 79, Issue 1, pp. 10-17. Gottschalk, P. , & Smeeding, T. M. (1997, Jun. ).

Cross-National Comparisons of Earnings and Income Inequality, Journal of Economic Literature, Vol. 35, No. 2, pp. 633-687. Mahler, V. A. (1989). Income Distribution within Nations: Problems of Cross-National Comparisons. Comparative Political Studies, Vol. 22, No. 1, pp. 3-32. Smeeding, T. M. (2004, Feb. 20). Public Policy and Income Inequality: The United States in Comparative Perspective. Luxembourg Income Study Working Paper Series, Working Paper No. 367. Retrieved Oct. 25, 2007, from http://www. lisproject. org/publications/liswps/367. pdf.

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