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The Stone Centre at UCL: Pioneering Research on Wealth Inequality

On Thursday 26th May 2022, UCL launched the Stone Centre On Wealth Concentration, Inequality, and The Economy. The Centre is supported by a £5m donation from the James M. and Cathleen D. Stone Foundation, with the mission to fund research and education on wealth inequality and concentration. Professors Wendy Carlin and  Imran Rasul of the UCL Economics Department are the  co-directors of the Centre.

In a packed hall across the yard from Westminster Abbey, an audience of academic titans tune in to opening remarks by James Stone, who reflects on his motivations for funding the new Centre at UCL. Once a lecturer in Economics at Harvard, James Stone proposes that economics continues to lack the fundamental knowledge to fulfil its “basic promise” of prosperity within “inclusive centres in universities worldwide, such as Brown, Harvard, City University of New York (CUNY), and now UCL. 

With that, a grand evening of display, debate, and networking began.

Keynote address by Professor James Heckman

The show starts with a bang: Professor James Heckman, economics Nobel laureate and the Henry Schultz Distinguished Service Professor of Economics at the University of Chicago, takes the stage. Soumaya Keynes, British economics editor at The Economist, introduces him to warm applause as a “champion of interdisciplinary work”. As many students completing courses in quantitative social sciences  will know, a large proportion of empirical research is incomplete without a reference to Professor Heckman’s work [See Levitt (2000) for an account of his contributions to empirical economics] - this is their ‘fan moment’.

Soumaya Keynes (left) introducing Professor James Heckman (right)

Expanding on the Centre’s core focus, Professor Heckman integrates the themes of wealth concentration and inequality to give insights into his ongoing research on “How the welfare state affects inequality and social mobility” that compares two cases: the United States and Denmark. With a twinkle in his eye, Heckman is quick to brush off the partisan implications of these choices, instead highlighting that family influence on several child outcomes is as strong in Denmark as in the US - in spite of Denmark often being pointed to as a model welfare state to emulate. 

The Great Gatsby curve showing that intergenerational mobility was higher in Denmark as compared to the United States.

“Denmark is a laboratory for understanding inequality and social mobility”, he stresses, praising the Danish data which is both rich and granular.  He leads the room through this research to date, providing evidence that Denmark has less inequality and greater intergenerational mobility as a consequence of tax and transfer policy, rather than superior human capital accumulation in children. 

Broadening his scope, he connects his research masterfully to wealth inequality as a whole. One of his most insightful arguments centres on the role of sorting in explaining observed intergenerational patterns. For instance, when parents pick neighbourhoods based on their income, individual choices can aggregate toward neighbourhood sorting by parental income, playing a powerful role in shaping civil society in both the US and Denmark. This notion of neighbourhood choice to raise children, largely ignored in other studies, is key to explaining intergenerational inequality. Of course, his theoretical explanations are backed up by extensive data analysis on four dimensions: inequality across the lifecycle, within-country differences, educational mobility, and intergenerational dependence on lifetime resources.

In harmony with James Stone’s opening message, Professor Heckman returns to the political issue at hand. Danish policies have been widely advocated, with Denmark attaining a worldwide reputation as a "Garden of Eden" among politicians and informed citizens alike. Yet Heckman urges caution - only time (and data) can tell if those policies have had their intended effect.

Panel on inequality and firms

Sir Angus Deaton (right) introducing the agenda for the panel discussion on inequality and firms.

Now came time for a panel of speakers to discuss a much-neglected facet of inequality: firms. Following Heckman’s impressive keynote (128 slides in 45 minutes!) was not an easy task, as admitted by the panel. Yet chair Sir Angus Deaton – Nobel Laureate in 2015 – promises the audience a first-rate show. Sporting his customary bowtie, and a playful smile, he produces a large walking stick from under the table, jokingly threatening to discipline any speaker who goes over the five-minute limit.

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Professor John Van Reenen providing the 'firm view'.

Professor John van Reenen of LSE sets the scene today highlighting the growth in markups while wages stagnate. With around 40% of today’s labour force situated in “megafirms”, these firms can more easily reallocate income away from workers as industries become more concentrated. [Even increases in entrepreneurship, seen more recently, has been from a rise in solo enterprise, and not a more even distribution of firm ownership among its stakeholders (mainly workers), bringing into question the role of large firms as a means for prosperous allocation of resources.] Developing oligopsonistic labour market models is a currently important mechanism explaining the observed wage markdown (and consequent inequality) but requires a more detailed theory of the firm.

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Professor Arin Dube giving insights on wages and inequality.

Hinting toward what such detail might include, Professor Arin Dube, renowned for exploring the relationship between minimum wages and inequality, emphasises that firms are more than just a production function. Rather, they face myriad choices, especially in a globalised world, which depend on the existing legislative environment. Should they outsource labour as Nike does? Should they introduce a voluntary minimum wage like Walmart and Amazon? How should they respond to the anti-work sentiment that may fuel the Great Resignation?

Finally, our very own Professor Wendy Carlin, co-director for the Stone Centre at UCL, explains how the centre’s operations at UCL will contribute to existing research and education. The Centre will support the highly successful CORE Econ to generate accessible educational resources on inequality and wealth. Theory from older textbooks, she claims, can often be completely out of touch with the issues students are concerned about. Carlin notes that the task at hand is to understand how concepts taught in CORE Econ can help us understand that the causes and consequences of inequality are far more complex than movements of points on a Lorenz curve. 

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Professor Wendy Carlin connecting the macro-discussions to teaching Economics.

Throughout, more questions than answers are raised. When the audience presents a question on how policies to tackle inequality between firms may link with their carbon output, the panel acknowledges the difficulty of answering the question at present, and offers a comment from Professor Carlin on the value of social movements in guaranteeing green innovation. When asked about the pecking order for policy recommendation, the panel responds: “that’s where we currently are”. Perhaps Sir Angus summarises it best when he posits that the original question that must be asked and answered by the Centre is to what degree “inequality [is] good for us”. Towards the end, Professor Carlin emphasises that the centre‘s research would have to consider not just the free market’s interaction with the state, but ultimately how both interact with civil society.

Concluding remarks and reception

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A snapshot of the reception at the Dean's Yard.

After a long day of discussion, Professor Wendy Carlin declares the Stone Centre at UCL open! She is joined by Janet Gornick, Professor of Political Science and Sociology at City University of New York (CUNY) and the Director of the Stone Centre at CUNY, who takes us through the Stone Centre’s journey worldwide thus far, with UCL’s Centre the sixth of  seven and the first in the UK. Both professors commit to upcoming collaborations and exchanges of research across centres, marking a new age in inequality research and certainly a new age here at UCL. The Centre’s first order of business is to equalise us all - speakers, panellists, and audience members alike gather on the balcony for continued discussion, follow up questions, and the opportunity to make  connections. Amongst the giants, we students are filled with excitement, admiring a room filled with two Nobel Laureates and several brilliant economic minds - in all, a perfect end to a perfect evening.

This blogpost is part of the CTaLE's project "enhancing the research-education synergy" funded by the UCL Faculty of Social & Historical Sciences Dean.

A full recording of the event is available on the Stone Centre website.

Further reading

  1. Resources on the showreel:
  2. Till date research by James Heckman and Rasmus Landerso on “Lessons from Denmark about social mobility and inequality”: 
  3. John van Reenen et. al. on superstar firms:
  4. Arin Dube et. al. on minimum wages:
  5. Steven D. Levitt: Honoring James Heckman's Contributions to Economics: Identification, Heterogeneity, and Economic Models:


Shivam Gujral

Shivam Gujral is a Graduate Analyst at JP Morgan, and UCL Economics Alumnus.

Shivam Gujral

Suraj Sridhar

Suraj Sridhar is the Research Correspondent of the UCL Economic Tribune.

Suraj Sridhar

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