Inequality and redistribution : the need for new perspectives

Abstract

Recent years have seen a marked increase in inequality in the OECD area, and since the early 1990s the trend has been unmistakable in Norway also. This paper offers a brief review of the main causes behind this development, in particular globalisation, skill-biased technical change, tax reform and deregulation, and a greater role for non-competitive labour markets. As an example of the last point it reviews a tournament model of wage formation and its implications for tax incidence and inequality. Lastly, the paper argues that the expenditure tax may be a better alternative than the dual income tax for combining concerns for economic efficiency and a more even distribution of income after tax.