Higher inequality in the UK linked to higher poverty]

via the STICERD blog from the London School of Economics and Political Science

Double Trouble report by Abigail McKnight, Magali Duque and Mark Rucci, commissioned by Oxfam

Both inequality and poverty are now on the rise again and predicted to increase further in the next 5 to 15 years, but it has never been established if the two are directly linked. Researchers Abigail McKnight, Magali Duque and Mark Rucci explored the different types of inequality including income inequality and concentration of wealth, over the period 1961 to 2016.

The report, Double Trouble, which was commissioned by Oxfam, shows that a positive correlation between income inequality and income poverty in the UK can be clearly established. Statistical analysis found that, on average, during the last 50 years a one point increase in income inequality - as measured using the Gini coefficient – was associated with an increase in relative poverty of 0.6 percentage points.

The report also examines the consequences of inequality, and in particular points to evidence that it leads to lower overall economic growth as well as negative consequences for some individuals and their families, and wider society. Higher levels of inequality are shown to sustain higher levels of poverty through a variety of mechanisms. One of these is the growing polarisation between ‘the rich’ and ‘the poor’. This affects people’s perception of inequality, results in a lack of understanding about what it is like to live on a low income, and this lack of empathy has important implications for support for public policy designed to reduce inequality and tackle poverty.

English Report (PDF 104pp)

English Summary (PDF 8pp)

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