Why Is Europe More Equal than the United States?

This article combines all available data to produce pretax and post-tax income inequality series in 26 European countries from 1980 2017. Our estimates are consistent with macroeconomic growth comparable US distributional national accounts. Inequality grew nearly countries, but much less than the US. Contrary a widespread view, we demonstrate that Europe’s lower levels cannot be explained by more equalizing tax transfer systems. After accounting for indirect taxes in-kind transfers, redistributes greater share of low-income groups any country. “Predistribution,” not “redistribution,” explains why Europe is unequal United States. (JEL D31, E01, H23, H24, H50, I38)