This article combines all available data to produce pretax and posttax income inequality series in 26 European countries from 1980 to 2017. Our estimates are consistent with macroeconomic growth and comparable with US distributional national accounts. Inequality grew in nearly all European countries, but much less than in the US. Contrary to a widespread view, we demonstrate that Europe's lower inequality levels cannot be explained by more equalizing tax and transfer systems. After accounting for indirect taxes and in-kind transfers, the US redistributes a greater share of national income to low-income groups than any European country. "Predistribution," not "redistribution," explains why Europe is less unequal than the United States.
Blanchet, Thomas, Lucas Chancel, and Amory Gethin.
"Why Is Europe More Equal than the United States?"
American Economic Journal: Applied Economics,
Personal Income, Wealth, and Their Distributions
Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
National Government Expenditures and Related Policies: General
Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs