policymakers demonstrate

Inequality and Welfare: Is Europe Special? 555
(see the recent policy reports of the IMF and OECD). One possible mechanism
could be that equality increases trust, which again increases growth, creating a
possible causal channel between equality and growth.
Inequality and ageing. What are the consequences of ageing on inequality?
Maybe a better formulation would be: What would be the redistributive consequences
of a longer life cycle? What would be the redistributive consequences
of a retirement age increasing with productivity?
Inequality and borrowing. A small bunch of papers investigate the causal
links between the increase in inequality and increase in borrowing in the case
of the US economy before the crisis. This issue can be raised as well in a few
European countries.
Inequality and technical progress. There is quite a consensus that the ICT
revolution has had adverse effects in terms of inequality, in the sense that it has
disproportionately increased the opportunities and therefore the market income
of college graduates, that is, those who have been trained to be able to stock,
understand and benefit from information. Will the next scientific revolution (to
be less dependent on fossil energy) be more neutral in distributional terms?
Inequality and globalization. This is also an old issue that needs to be revisited.
To some extent, as long as Asia becomes richer, the downward pressure
for low-skilled wage in the developed world will become less strong and maybe
it will open the way to a more equal distribution of the productivity gains in
the firm in the old industrialized countries. However, globalization cannot be
reduced to the free-trade dimension. The other dimension is the fact that production
factors and particularly, capital and skilled labour, are freer to go from
one zone to another. The consequences of factor moves on economic inequalities
are still to be fully understood.
Inequality and social insurance. Although from a policy perspective it is
often hard to distinguish the social insurance motive from the redistributive
motive, studying the role of risk preferences in explaining welfare policies and
the relationship between risk preferences and social preferences could also be
part of a fruitful research agenda.
On all these subjects, broadly speaking, we have data, we have models, but
generally we lack good calibrated models, particularly at the macroeconomic
level.
12.8 Cutting Edge Research Issues
I see four issues that are not settled, the fourth one being quite new.
First, in the wake of Thomas Piketty’s latest book, Capital in the Twenty
First Century, the role of wealth distribution on the increase of inequalities
has been addressed by many scholars. Piketty challenges the previous view
that the increase in inequalities in the US was mainly due to the increasing