Introduction to Sociology: Social Inequality Siniša Zrinščak November 24,

Introductory question Is inequality good or bad? And why? Do we need inequality? And how much?

Inequality / social stratification Inequality / difference – individual or social? Social stratification – systematic process of ranking people on a scale of social worth and how that ranking affects life chances Social inequality – unequal distribution of resources like income, wealth, prestige and power – societally anchored forms of privileging some over others Inequality – universal but different across time / space

Theories… Main causes ? Marx – class – two opposing classes – economic property as a main cause – unresolved conflict Weber – multi-dimensional – economic yes, but: - market position – class standing influenced by occupation, education… - status group – an amorphous group of people held together by virtue of a lifestyle + level of social esteem - political parties – represent status groups / interest

Complex views on inequalities Functionalist view – inequality exists as it contributes to overall order and stability in society. Mechanism by which societies attract the most qualified people to the most functionally important occupations Really – more rich = more important? More unequal = more productive? Equal chances for everyone? = → Conflict view – impact of race, age, sex, ethnicity… Deep social conflicts = social costs of inequality

Poor kids who do everything right don’t do better than rich kids who do everything wrong; By Matt O'Brien October 18, 2014 – the Washington Post America is the land of opportunity, just for some more than others!Matt O'Brien

Trends Optimistic: Kuznets’s curve – rise in industrialization phase, decline later Bell – knowledge as an important aspect + political parties (Weber) Pessimistic – growing income and wage inequality, polarisation of social structure, persistence of different patterns in different countries + globalization and restructuring of work / employm.

Esping-Andersen – from more equal social- democratic states to more unequal liberal / south- European / post-socialist states T. Piketty – Capital in the 21st century – Rising inequality in the world – two main reasons – explosion of income of top managers + faster growth of value of wealth (capital) than value of income from work

… and empirical insight Income inequality – Eurostat data on the gross annual income of full time employed person in the industrial or service sectors…. … see data on differences among the EU member states… Inequality of household income (Q5 / Q1) + Gini coefficient Gender pay gap

The ratio of total income received by the 20 % of the population with the highest income (top quintile) to that received by the 20 % of the population with the lowest income (lowest quintile). Income must be understood as equivalised disposable income.

The Gini coefficient is defined as the relationship of cumulative shares of the population arranged according to the level of equivalised disposable income, to the cumulative share of the equivalised total disposable income received by them.

Gender pay gap 2012

The gap between rich and poor is growing …Income inequality has reached record highs in most OECD countries. In the 1980s, the richest 10% of the population had 7 times the income of the poorest 10%; they now have almost 10 times the income of the poorest 10%.

OECD, 2015.: „In It Together. Why Less Inequality Benefits All” Over the past three decades, income inequality has risen in most OECD countries, reaching in some cases historical highs. Today, the Gini coefficient – a common measure of income inequality that scores 0 when everybody has identical incomes and 1 when all the income goes to only one person – stands at an average of in OECD countries, exceeding 0.4 in the United States and Turkey and approaching 0.5 in Chile and Mexico.

The empirical evidence has until recently been mixed as to which of the opposite forces dominates and in which country. But new research at the OECD, presented in Chapter 2, finds consistent evidence that the long-term rise in inequality of disposable incomes observed in most OECD countries has indeed put a significant brake on longterm growth. Further, it shows that efforts to reduce inequality through redistribution – typically, certain forms of taxes and benefits – do not lead to slower growth (confirming similar results in Ostry et al., 2014).

Wealth inequality – business assets, real-state assets, financial assets – much harder to capture Wealth inequality grater than income inequality – financial assets inequality twice that of households income

Poverty – absolute – possession of goods necessary to enable persons to physically exist Relative – what is poverty in relation to prevailing living standards in one country EU – at-risk-of poverty bellow 60% median national income – before and after social transfers At-risk-of poverty or social exclusion

The Europe 2020 strategy promotes social inclusion, in particular through the reduction of poverty, by aiming to lift at least 20 million people out of the risk of poverty and social exclusion. This indicator corresponds to the sum of persons who are: at risk of poverty or severely materially deprived or living in households with very low work intensity. Persons are only counted once even if they are present in several sub- indicators. At risk-of-poverty are persons with an equivalised disposable income below the risk-of-poverty threshold, which is set at 60 % of the national median equivalised disposable income (after social transfers).

Material deprivation covers indicators relating to economic strain and durables. Severely materially deprived persons have living conditions severely constrained by a lack of resources, they experience at least 4 out of 9 following deprivations items: cannot afford i) to pay rent or utility bills, ii) keep home adequately warm, iii) face unexpected expenses, iv) eat meat, fish or a protein equivalent every second day, v) a week holiday away from home, vi) a car, vii) a washing machine, viii) a colour TV, or ix) a telephone. People living in households with very low work intensity are those aged 0-59 living in households where the adults (aged 18-59) work less than 20% of their total work potential during the past year.

At-risk-of poverty

At-risk-of poverty or social exclusion

Material deprivation

Groups more exposed to poverty /though witn country differences): - lone parents - families with three or more children - children (infantilisation of poverty) - older / retired - unemployed - less educated - migrants