Contraction and Convergence: Using the Economic Downturn to Move Towards a More Equal Society

Abstract

Reviews of the UK Labour governments between 1997 and 2010 indicate that their policies to tackle inequality have been ineffective. This paper examines some structural causes of inequality and explains how it has been exacerbated by the fiscal crisis. It proposes a framing of this debate in terms of a convergence of incomes during the Recession to match the divergence that occurred during the boom and suggests policies to effect such a convergence.

Keywords: inequality, fiscal crisis, public spending

JEL Classification: G01, H27, H63