Inequality, debt and growth

Inequality, debt and growth shows that low to middle income households were reliant on borrowing to fund much of their spending for more than a decade before the financial crisis. The report reveals the full extent of the increase in borrowing and deterioration in household savings rates in the run up to the 2008/09 crisis, with the poorest 10% outspending their income by 40% by 2007. Given only a minority of the poorest are homeowners paying off their mortgage, it is highly unlikely this was counterbalanced by an increase in housing wealth.

by Paolo Lucchino and Salvatore Morelli, May 2012

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• Inequality, debt and growth

Minimum Wage: Maximum Impact

Professor Alan Manning,  Head of Economics at the LSE, steps back from the current annual debate about the appropriate but small rise in the value of the minimum wage to ask a bolder question: are there more radical reforms of the minimum wage that could raise living standards in the years ahead?

by Professor Alan Manning, April 2012

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• Minimum Wage: Maximum Impact

The changing shape of the UK job market and its implications for the bottom half of earners

Craig Holmes and Professor Ken Mayhew, investigate the idea that in recent years the UK labour market has split into high-wage "lovely" jobs and low-wage "lousy" jobs, while jobs in the middle have disappeared.

by Craig Holmes and Ken Mayhew, March 2012

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• The changing shape of the UK job market and its implications for the bottom half of earners

Decoupling of Wage Growth and Productivity Growth? Myth and Reality

A closer look at the decoupling of wage growth and productivity growth: Pessoa and Van Reenen distinguish between 'gross' and 'net' decoupling and examine the trends of both in the US and the UK.

by João Paulo Pessoa and Professor John Van Reenen, February 2012

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• Decoupling of Wage Growth and Productivity Growth? Myth and Reality

Priced Out: The new inflation and its impact on living standards

The great majority of households in Britain are currently experiencing a fall in the buying power of their incomes. Put simply, inflation is running around 5%, and few households have seen their incomes rise by this amount in the past year. This paper identifies new evidence that, because of a new inflation environment, hard times started significantly earlier for households on lower incomes than for the average UK household. Because the costs of essential goods and services have been rising much faster than standard rates of inflation for some time, households on modest incomes have fared far worse than official data suggests.

By Donald Hirsch, James Plunkett, Jacqueline Beckhelling, December 2011

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• Priced Out

Why did Britain’s households get richer? Decomposing UK household income growth between 1968 and 2008–09

IFS analysis for the Resolution Foundation

Average UK household income has almost doubled in real terms over the past forty years. This report asks ‘From where has the growth in household income come?’ and answers this by analysing the various factors that have contributed to this growth.

By Mike Brewer and Liam Wren-Lewis, December 2011

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• Why did Britain's households get richer?

The Great Stagnation?

On 21st November the Resolution Foundation held the event 'The Great Stagnation? - What Britain can learn from the declining fortunes of the American middle class'.

There were presentations from:

Gavin Kelly - Chief Executive, Resolution Foundation

Jared Bernstein -  former Chief Economist to Vice President Joe Biden

Professor Lane Kenworthy - Professor of Sociology and Political Science at the University of Arizona

Professor Stephen Machin - Professor of Economics at the London School of Economics

The slides are able to download below. For more information, videos and photos of the event please visit our main website.

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• The Great Stagnation? slides

When does economic growth benefit people on low to middle incomes – and why?

For many of the world's rich countries, the most important challenge at the moment is returning to robust economic growth. There remains great uncertainty about the pace and path of recovery. Eventually, though, growth will return. This report asks a longer term question: when growth does return, to what degree will low-to-middle households benefit?

by Lane Kenworthy, November 2011

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• When does economic growth benefit people on low to middle incomes - and why?

Painful Separation

by Jess Bailey, Joe Coward and Matthew Whittaker, October 2011

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• Painful Separation

Growth without gain?

In the US, the phenomenon of median wage stagnation is being interpreted by some leading economists as a ‘decoupling’ of growth from gain. The productivity of labour – commonly understood as the key driver of rising wages – has continued to grow, but these gains have failed increasingly to feed through into pay packets. The effects of this ‘decoupling’ on households have not been trivial.

by James Plunkett, May 2011

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• Growth without gain
• Growth without gain - executive summary

Missing Out

It is a central assumption of modern, democratic economies that economic growth leads to rising living standards for the great majority of people. Now, evidence is emerging that questions that assumption. Median wages in the UK were stagnant from 2003 to 2008 despite GDP growth of 11 per cent in the period. Similar trends are evident in other advanced economies from the US to Germany.

If a central goal of government is to secure a new period of rising living standards then these trends point to one of the great economic challenges of our time: the need to restore the link between economic growth and the pay of ordinary working people.

by Matthew Whittaker & Lee Savage, July 2011

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• Missing Out
• Missing Out Technical Appendix
• Missing Out Executive Summary