Ranaldi, Marco;
(2025)
Compositional Inequality: Measurement, Stylized Facts, and Theoretical Aspects.
Review of Political Economy
10.1080/09538259.2025.2492253.
(In press).
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Abstract
This paper explores the concept, measurement, principal stylized facts, and theoretical aspects of compositional inequality. Compositional inequality refers to how the shares of capital and labor income vary along the income distribution. This analysis is valuable for several reasons. From a macroeconomic perspective, it elucidates the link between functional and personal distributions of income, which is crucial for addressing the drivers of income inequality in a context of rising capital share. From a comparative economic perspective, it locates economic systems on the continuum between two extremes: classical capitalism, where the rich earn predominantly from capital and the poor from labor, and new capitalism, where the composition of capital and labor is uniform across the distribution. We refer to the entire range of systems along this continuum as the distributional varieties of capitalism. Recent empirical studies indicate that, in most countries, we are far from classical capitalism, though with notable exceptions, such as Latin American countries. This underscores the need to evaluate the benefits of compositional equality. The paper concludes that compositional equality is desirable for at least two reasons: it promotes fairness and supports an inclusive, profit-driven regime of accumulation and growth.
| Type: | Article |
|---|---|
| Title: | Compositional Inequality: Measurement, Stylized Facts, and Theoretical Aspects |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1080/09538259.2025.2492253 |
| Publisher version: | https://doi.org/10.1080/09538259.2025.2492253 |
| Language: | English |
| Additional information: | Copyright © 2025 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way. The terms on which this article has been published allow the posting of the Accepted Manuscript in a repository by the author(s) or with their consent. |
| Keywords: | Capital and labor; interpersonal income inequality; functional income distribution; inequality measurement |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of Arts and Humanities |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10208112 |
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