(Un)Fair inequality in the labor market: A global study

"Every human society must justify its inequalities: unless reasons for them are found, the whole political and social edifice stands in danger of collapse" - Thomas Piketty

How do citizens of different societies perceive the fairness of inequalities? Answering this question is key to understanding increasing social tensions, and informing the design of policies that address the current and widespread discontent with existing economic and political institutions.

There are two reasons why citizens may perceive inequalities as unfair. First, actual inequalities may not square with their fairness preferences, e.g., people may dislike the extent of gender pay gaps, or they may think that the returns to long working hours are too low. Second, they may have biased beliefs about actual inequality, e.g., people may overestimate the size of gender pay gaps, or they may underestimate the earnings effects of working hours. These examples illustrate that an understanding of fairness perceptions requires in-depth knowledge of citizens' fairness preferences and their beliefs about inequality in different domains of the labor market. However, to date, there is no harmonized data collection that integrates these elements and enables us to measure perceived unfairness and understand its consequences for society on a global scale. As a consequence, our current knowledge is either based on strong assumptions about peoples' fairness preferences and beliefs about inequality, or confined to single-country studies that cannot take account of the diversity of perceptions across countries with different geographic, cultural, and economic characteristics.

In my FLF, I will address this gap. I will lead a network of stakeholders including the general public, policymakers, and scientists to identify domains of labor market inequality that are at the core of fairness perceptions; collect corresponding data on preferences and beliefs about labor market inequality in 50 countries worldwide; and construct measures of perceived unfairness that allow us to assess the implications of perceived unfairness for important societal outcomes that are essential building blocks for well-functioning societies.

In years 1-4, I will divide my FLF into three working packages (WPs):

WP1 - Develop a measurement framework and associated survey module taking into account the views of key stakeholders such as the general public, policymakers, and academics from diverse cultural and economic backgrounds (Years 1-2).

WP2 - Collect harmonized data on fairness preferences and inequality beliefs in 50 countries (incl. the four nations of the UK) representing a broad range of geographic, cultural, and economic characteristics (Years 2-3).

WP3 - Analyze the anatomy of perceived unfairness and its implications for societal outcomes including support for democracy, trust in institutions, and support for public policies (Years 3-4).

In years 5-7, I will build on the initial findings and use both field experiments and quasi-experimental variation from policy reforms to investigate whether preferences and beliefs regarding different domains of labor market inequality are malleable by policy intervention. Thereby, I will provide important insights for civil society organizations and policymakers on how to address perceived unfairness and discontent with current economic systems.

This agenda will improve our understanding of one of the most widely debated social issues of our times: unfair inequality in labor markets. I will analyze this phenomenon on a global scale while integrating the perspectives of a diverse set of stakeholders. My FLF combines an ambitious and multidisciplinary research programme that will generate a series of high-profile journal articles with a personalized programme for my professional development. These elements make the FLF a unique opportunity to establish myself as a leading expert regarding inequality and fairness in Europe and beyond.