Inequality and Institutions Summer School : Program content

by Ignacio Flores and Thomas Piketty

Inequality, a critical issue at the forefront of global economic research and policy, commands attention in both developed and developing countries. This course seeks to unravel the complexities of the topic, addressing pivotal questions: “Inequality of what? Among whom? What are the drivers of Inequality? What can we learn from History? Should we focus on poverty more than inequality? What percentage of wealth is inherited?” Through a blend of foundational concepts and modern methodologies, students will engage in dissecting complex, contradictory data sets like household surveys, administrative data, and national accounts. Central to our inquiry is the World Inequality Database, a key tool for understanding and shaping contemporary research. This course not only reviews existing literature but also paves the way for future exploration, probing into uncharted territories of inequality research.

The core materials of this module will be taught by Ignacio Flores (4.5h), and Thomas Piketty will give a 1.5h lecture focusing on recent research.

Structure

• General introduction
• Fundamentals of inequality
• Global and regional perspectives
• Making Sense of Contradictory Information
• The World Inequality Database
• Historical Insights
• What can be done?

Selected key references

• Atkinson A. B., 1970, “On the measurement of inequality”, Journal of economic theory, 2(3), pp 244-263.
• Atkinson A. B., 2015, Inequality: What can be done?, Harvard University Press.
• Atkinson A. B. & Bourguignon F., 2000, “Introduction, Handbook of income distribution”, volume 1, North-Holland.
• Alvaredo F., Atkinson A. B., Piketty T. & Saez E., 2013, “The top 1 percent in international and historical perspective”, Journal of Economic perspectives, 27(3), pp 3-20.
• Blanchet T., Fournier J. & Piketty T., 2022, “Generalized Pareto curves: theory and applications”, Review of Income and Wealth, 68(1), pp 263-288.
• Blanchet T., Flores I. & Morgan M., 2022, “The weight of the rich: improving surveys using tax data”, The Journal of Economic Inequality, 20(1), pp 119-150.
• Chancel L. & Piketty T., 2015, Carbon and Inequality: from Kyoto to Paris. Trends in the Global Inequality of Carbon Emissions (1998-2013) and Prospects for an Equitable Adpatation Fund, PSE working paper.
• Chancel L., Piketty T., Saez E. & Zucman G., 2022, World inequality report 2022, Harvard University Press.
• Chetty R., Hendren N., Kline P. & Saez E., 2014, “Where is the land of opportunity? The geography of intergenerational mobility in the United States”, The Quarterly Journal of Economics, 129(4), pp 1553-1623.
• Corak M., 2013, “Income inequality, equality of opportunity, and intergenerational mobility”, Journal of Economic Perspectives, 27(3), pp 79-102.
• Deaton A., 2005, “Measuring poverty in a growing world (or measuring growth in a poor world)”, Review of Economics and statistics, 87(1), pp 1-19.
• Milanovic B., 2016, Global inequality: A new approach for the age of globalization, Harvard University Press.
• Piketty T., 2014, Capital in the Twenty-First Century, Harvard University Press.
• Piketty T. & Saez E., 2003, “Income inequality in the United States, 1913–1998”, The Quarterly journal of economics, 118(1), pp 1-41.
• Piketty T. & Zucman G., 2014, Capital is back: Wealth-income ratios in rich countries 1700-2010, The Quarterly journal of economics, 129(3), pp 1255-1310.

by Thierry Verdier

Cultural dimensions, ethnic identity and social norms are increasingly recognized as important evolving factors in economic development. They are also acknowledged to contribute and interact with the political economy of development policy and conflicts. This part takes stock of existing economic research on identity formation and cultural change, and their connections to conflicts and governance and institutional issues. We present recent theoretical advances on these issues, and their applications to specific development contexts. This course offers theoretical foundations for the more applied modules on corruption, institutions, and civil conflict.

Structure

• Models of Identity formation and cultural evolution
  • Applications to growth and market integration
• Cultural Polarization, Ethnic Identity and Conflicts in Development
  • Ethnic Identity and Violence in Development
• Co-evolution of Culture and Institutions
  • Civic culture and corruption
  • Culture of violence and Property Rights

Selected key references

• Akerlof G. & Kranton R., 2000, “Economics and Identity”, The Quarterly Journal of Economics, 115, pp 715-753.
• Akerlof G. & Kranton R., 2010, Identity Economics: How Identities Shape Our Work, Wages, and Well-Being, Princeton University Press.
• Becker G., 1996, Accounting for Taste, Harvard University Press.
• Boyd R. & Richerson P., 1985, Culture and the Evolutionary Process, The University of Chicago Press.
• Bisin A. & Verdier T., 2011, “The Economics of Cultural Transmission and Socialization” in the “Handbook of Social Economics”, Benhabib J., Bisin A. & Jackson M., North Holland.
• Mc Elreath R. & Boyd R., 2007, Mathematical Models of Social Evolution: A Guide for the Perplexed, The University of Chicago Press.

by Clara Martinez-Toledano

Income and wealth inequalities have increased substantially in many regions of the world since the 1980s. This evolution came after a relatively egalitarian period from 1950 to 1980, accompanied by inclusive growth and the expansion of welfare states. Yet, this reversal has not led to wide-spread demands for redistribution or the revival of class conflicts. The past decades have seen instead the rise of various forms of identity-based politics, embodied by the Brexit vote and the success of xenophobic parties in Europe, Donald Trump in the United States, Jair Bolsonaro in Brazil, and Narendra Modi in India. What explains this remarkable transformation? Why have so many democracies left growing inequalities unchecked and shifted to debates over immigration, national identity, and integration? This part of the course  will review recent contributions to our understanding of these important issues by studying the interplay between social inequalities and the long-run evolution of political cleavages in the western and non-western world.

Structure

• Democracy and the Politics of Inequality
• Conceptual Framework and Data Sources
• Depoliticizing Class: Income, Education, and Multi-elite Party Systems
• Ethnoreligious and Sociocultural Cleavages
• Spatial Identities, Regional Cleavages, and Separatism
• Generational Cleavages
• Gender Cleavages
• Toward a Typology of Socioeconomic Cleavage Structures

Selected key references

• Lipset S. M. & Rokkan S., 1967, Cleavage structures, party systems, and voter alignments: an introduction, Free Press.
• McCarty N. & Pontusson H. J., 2011, “The political economy of inequality and redistribution”, The Oxford handbook of economic inequality, pp 665-692.
• Gethin A., Martínez-Toledano C. & Piketty T., 2021, Political Cleavages and Social Inequalities: A Study of Fifty Democracies, 1948-2020, Harvard University Press.
• Gethin A., Martínez-Toledano C. & Piketty T., 2022, “Brahmin left versus merchant right: Changing political cleavages in 21 Western Democracies, 1948-2020”, The Quarterly Journal of Economics, 137(1), pp 1-48.

by Philine Widmer

Artificial intelligence is likely one of the fundamental forces shaping the economy and society of the 21st century. Consequently, it is also one of the key areas where government regulation could be highly impactful. On the one hand, political institutions and policies influence the speed at which AI technologies develop and spread, as well as the types of technologies that emerge. On the other hand, regulation will mediate the social and economic impact of these technologies. This module will discuss the relatively young body of literature on these questions to explore what we know – and don’t know – about how AI interacts with institutions and critical areas of government regulation, such as the labor market or antitrust.

Structure

• How does AI relate to political economy, and, more specifically, inequality?
• How will governments shape the diffusion of AI?
• How will governments regulate AI?

Selected key references

• Agrawal A., Gans J. & Goldfarb A., 2019, The Economics of Artificial Intelligence: An Agenda [Conference held September 13-14, 2017], The University of Chicago Press.
• Beraja M., Kao A., Yang D. Y. & Yuchtman N., 2023, “AI-tocracy”, The Quarterly Journal of Economics, 138(3), pp 1349-1402.
• Beraja M., Yang D. Y. & Yuchtman N., 2023, “Data-intensive Innovation and the State: Evidence from AI Firms in China”, The Review of Economic Studies, 90(4), pp 1701–1723.
• De Ridder M., 2024, “Market Power and Innovation in the Intangible Economy”, The American Economic Review, 114(1), pp 199-251.
• Frank M. R., Autor D., Bessen J. E., Brynjolfsson E., Cebrian M., Deming D. J., Feldman M., Groh M., Lobo J., Moro E. et al., 2019, “Toward Understanding the Impact of Artificial Intelligence on Labor”, Proceedings of the National Academy of Sciences, 116 (14), pp 6531–6539.
• Goldfarb A. & Que V. F., 2023, “The Economics of Digital Privacy”, Annual Review of Economics, 15, pp 267-286.
• Kasy M., 2023, The Political Economy of AI: Towards Democratic Control of the Means of Prediction, Working Paper No. 2023-06, INET Oxford.

by Oliver Vanden Eynde

This module studies the role of political institutions in shaping economic development and inequality. First of all, the course takes a macro perspective, and reviews the two-way causal relationship between democratic institutions and economic growth. Then, the course zooms in on particular political institutions and how they affect economic development and inequality. As hybrid political regimes are on the rise, understanding the precise mechanisms through which political institutions affect economic development is particularly important.

Structure

• Does democracy cause growth?
• Does growth cause democracy?
• Mechanisms through which political institutions affect development and inequality.

Selected key references

• Acemoglu D. & Robinson J. A., 2001, “A theory of political transitions”, The American Economic Review, 91(4), pp 938-963.
• Acemoglu D., Suresh N., Pascual R. & Robinson J. A., 2019, “Democracy Does Cause Growth”,  Journal of Political Economy., 127(1), pp 47-100.
• Burgess R., Remi J., Edward M. & Ameet M., “The value of democracy: evidence from road building in Kenya”, The American Economic Review, 105(6), pp 1817-1851.
• Dal Bo P., Andrew F. & Putterman L., 2010, “Institutions and Behavior: Experimental Evidence on the Effects of Democracy”, The American Economic Review, 100(5), pp 2205-2229.
• Kudamatsu M., 2012, “Has Democratization Reduced Infant Mortality in sub-Saharan Africa? Evidence from Micro Data”, Journal of the European Economic Association, 10(6), pp 1294-1317.
• Papaioannou E. & Siourounis G., 2008, “Democratisation and Growth”, The Economic Journal, 118(532), pp 1520-1551.