The Lost Decade

Eurostat's method measuring inequality in the EU delivers wrong estimates as it neglects the big income disparities between countries. The present analysis intends to correct that mistake by providing estimates of the »true« EU-wide inequality combining both dimensions.

After a decade, EU-wide inequality finally regained its previous low level of 2009. This achievement was driven by the relatively strong growth in the poorer member states between the Baltics and the Balkan. The second driver of EU-wide inequality, within-country inequality, has hardly contributed to this development, as it has remained relatively stable or even increased. The EU could and should do more to promote catch-up growth and to encourage redistributive policies within member states.

The EU is an entity with 28 (now 27) member states. Thus, its income distribution can be decomposed into the within-country and the between-country distribution. Actually, the Statistical Office of the EU (Eurostat) and most research based on its data, work from bottom up starting from the national income distribution and constructing the EU-wide income distribution. Eurostat itself provides values for the whole EU by calculating weighted (by population) averages of the national values of certain indicators. This method delivers wrong estimates as it neglects the big income disparities between countries. The present analysis intends to correct that mistake by providing estimates of the »true« EU-wide inequality combining both dimensions.

Download: "A Lost Decade"

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