Abstract

This chapter reviews the literature about inequality and welfare with a particular focus on whether Europe has a special sensitivity to these matters or specific outcomes. It is argued that both statements are likely to be true, which raises the possibility of a causal link. Europe has relatively good results in terms of inequality and welfare in comparison with other continents and more specifically America, because these issues matter for European people. Still, research needs to be fostered in at least 5 areas that are detailed at the end of this review. Specific attention is devoted to the contribution of other social sciences and natural sciences (cognitive science) to the development of our knowledge for the field of inequality and welfare.

Introduction

Distribution and redistribution issues have never left the European stage either in public debate or on the research agenda in economics and other social sciences. The novelty comes from the US where public opinion is changing dramatically. While for a long time inequality was not considered a hot topic, and correlatively a benign-neglect public policy seemed to be in force, rising inequality is attracting the attention of the media, of the public and of politicians in theUS, as testified by the huge success of Piketty's masterpiece Capital in the Twenty First Century. Since to some extent the political agenda of each society is reflected in the scientific agenda of researchers through inclination and public funding, it is not surprising that Europe is challenging the US in many areas regarding inequality and welfare. Having said that, our understanding of the dynamics of inequality does not match the needs required by well-calibrated economic and social policies.

This chapter will be structured around the points mentioned in COEURE's call for expression of interest. All issues may be encompassed in a broader question: is Europe special? Special because of the issues raised at a social or political level or because of the nature of the contribution made by European economists. As Angela Merkel likes to say, ‘Europe represents 7% of the world's population, 25% of the global GDP and 50% of the total social spending at the world level.’ These figures tell us first that Europe is small and rich.