The Stone Centre launches in London with new insights into economic inequality, mobility and wealth concentration

On Thursday May 26 UCL celebrated the launch of the Stone Centre. The James M. and Cathleen D. Stone Centre on Wealth Concentration, Inequality, and the Economy will advance research and education to provide a clear understanding of the causes of wealth inequality, and its economic and political consequences.  James Stone opened the launch event, in a packed Church House overlooking Westminster Abbey, with a challenge: "If I knew how to strike the balance that best maintains incentives for innovative entrepreneurship while curbing excessive imbalances, I might concentrate on political action rather than academic centers. But I do not. … the goal of this initiative is to fulfil the promise of economics by concentrating as much attention on issues of equitable distribution as those of efficiency”.

The keynote from Nobel laureate James Heckman provoked the audience with his lecture: “How the welfare state affects inequality and social mobility: A comparison of the US and Denmark”. Whilst affirming that the welfare state achieves low income inequality through taxes and transfers and that intergenerational income mobility is higher in Denmark than the US, his research shows that the Danish provision of universal access to education, health and social services does not make the process of transmitting human capital from one generation to the next very different from the US.

Whilst still taking in what these results might imply for policy and research, new food for thought was provided by a panel discussion hosted by Nobel laureate Sir Angus Deaton. Sir Angus, who chairs the IFS-Deaton Review on Inequality, shifted the focus from households to the role firms play, suggesting this has received too little attention. John Van Reenen linked the bigger gaps between superstar firms and laggards to declining productivity growth, highlighting a theme taken up by the panel about the connection between inequality and innovation. Arin Dube showed how the pay decisions by superstar firms like Walmart can affect earnings and employment at the bottom end of the labour market in similar ways to a minimum wage. Panelist and co-director of the Stone Centre, Wendy Carlin, explained that “having wealth means being able to take risks and to innovate, like starting a business, or in even relatively modest ways, like moving to a different place or learning new skills. However, the ‘many’ are excluded from the ‘risk and innovation’ club”, further perpetuating existing patterns of wealth concentration and inequality.

The conversations among researchers, students and policy makers seeded at the launch will be taken up in the programme of work of the new Centre. In closing the event, Janet Gornick, director of the Stone Center on Socio-Economic Inequality at CUNY, highlighted the collaborative potential of the interdisciplinary network of Stone Centres. Using the CORE project’s reach in economics teaching and the growing number of Stone Centres to facilitate PhD student exchange visits, the Centre will contribute to a new generation of students and researchers who see an understanding of inequality as part of their DNA as economists. The Centre will work closely with UCL’s new Policy Lab and other organisations to take the research findings, policy advice and new educational resources to a wide audience. 

The co-directors of the Centre are Wendy Carlin, Professor of Economics and founding director of CORE Econ and Imran Rasul, Professor of Economics and co-director of the ESRC Centre for the Microeconomic Analysis of Public Policy at the IFS. Ahead of the launch, Imran Rasul reflected on his and the Centre’s passion to transform debates on inequality: “In many ways working on this agenda is very personal to me. My parents came to the UK as migrants in the 1960s, and a combination of hard work and economic opportunities allowed their family to experience tremendous mobility over two generations. Understanding how our society can allow everyone to fulfil their potential and enjoy economic security, and making sure that knowledge spreads, is something that is very important to me – as a father and as an economist.”

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• A recording of the event is available on the Stone Centre website.
• Selected excerpts from the event are available on the Stone Centre website.