People in Economics: Branko Milanovic – IMF Finance & Development Magazine | March 2019
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- People in Economics: Branko Milanovic – IMF Finance & Development Magazine | March 2019
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Bibliographic details
- Authors: CHRIS WELLISZ
- Published: March 1, 2019
Profile and intellectual journey
- Childhood in Communist Yugoslavia; witnessed the protests of 1968 and their formative influence.
- Doctoral dissertation on inequality at the University of Belgrade decades before inequality became a mainstream topic.
- Fellowship at Florida State University; early exposure to stark income inequality and racial discrimination in the United States.
- Two-decade career at the World Bank’s Research Department, where cross-country household survey data motivated comparative global work.
- Published widely on inequality, history, literature, sports, and postcommunist transitions; notable books include The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality (2011) and Global Inequality: A New Approach for the Age of Globalization.
Key empirical contributions
- Seminal study of global income inequality covering 1988 to 2008 that introduced the “elephant curve.”
- The elephant curve (2013, cowritten with Christoph Lakner) shows:
- Dramatic income increases for middle classes in developing economies (mainly in Asia).
- Large gains for the top 1 percent of earners worldwide (“global plutocrats”).
- Earnings stagnation for lower middle classes in advanced economies.
- Subsequent work and confirmations:
- Thomas Piketty and collaborators (2018) found that the top 1 percent globally captured twice as much of total growth as the bottom 50 percent from 1980 to 2016.
- Piketty observed the pattern as even stronger than initially suggested (“The elephant looks more like a mammoth.”)
- Early global income distribution study published in 1999 (four years after idea conceived in 1995) using household surveys assembled across countries.
- Diverse empirical explorations:
- Estimated average income and inequality in Byzantium in the year 1000.
- Analysis of labor mobility and inequality in soccer: club soccer inequality increased while national-team inequality fell due to player mobility.
- Income estimates for characters in Pride and Prejudice and Anna Karenina in The Haves and the Have-Nots.
Analytical perspective and theories
- Views inequality as moving in waves or cycles influenced by benign and malign forces, contrasting with Piketty’s view of inexorable widening under capitalism.
- Historical pattern cited:
- 19th and early 20th centuries: widening disparity.
- Wars and hyperinflation: malign forces that reduced inequality by destroying wealth.
- Post–World War II: benign forces (progressive taxation, stronger labor unions, broader education) reduced inequality.
- Fall of the Berlin Wall plus China’s opening led to rapid developing-world growth that narrowed between-country inequality while widening within-country inequality in advanced economies.
- Predicts continued convergence for much of the developing world, especially Asia; a grimmer outlook for advanced economies where globalization and technological innovation will continue to squeeze the middle class.
- Anticipates declining social mobility as an entrenched elite benefits from better access to expensive higher education and political influence to enact “pro-rich” policies (e.g., favorable tax regimes).
- Warns of rising social tensions and political strife (citing Brexit and protests in France since his 2016 book), with risks of “decoupling” democracy and capitalism, possible plutocracy in the United States, and populism or nativism in Europe.
Policy recommendations and proposals
- Traditional income redistribution is less effective due to capital mobility and tax havens.
- Advocate redistribution of “endowments” such as wealth and education:
- Higher inheritance taxes.
- Policies encouraging companies to distribute shares to workers.
- Increased state funding for education.
- Migration policy proposal:
- Allow more immigrants but deny them full rights of citizenship, and potentially tax them to compensate citizens displaced in the labor force.
- Emphasizes long-term objective: move toward a capitalist world where endowments are more equally distributed; acknowledges this will not be achieved “tomorrow.”
Current and future research frontiers
- Current work: study of class structure in the People’s Republic of China, focusing on the top 5 percent of the income distribution as part of his next book, Capitalism, Alone.
- Two data-driven frontiers for inequality research:
- Wealth inequality (as in Piketty’s work).
- Intergenerational inequality (work by economists such as Raj Chetty).
- Views these areas as appealing to a new generation of socially aware, technically capable researchers; he expresses optimism about the field’s future.
People in Economics: Branko Milanovic — profile by Chris Wellisz, F&D Magazine, March 2019.
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