A/HRC/31/60 massive inequality jumps. Using the ratio 90 to 10 as a proxy of inequality, United States income inequalities have risen by 11 per cent between 2007 and 2011.72 45. When assessing the impact of financial crises on inequality, it is necessary to keep two aspects in mind that may lead to distortions of the outcomes. First, poverty rates may only be a limited indicator of the scope of the problem, as the number of people falling into poverty and escaping poverty over the same period may surge, increasing the depth of poverty, while the poverty rate remains stable. Second, top income earners may experience a decrease of their revenues in the short run owing to a crisis because of their higher dependence on capital income. This may explain why the distributional effect of crises is not always clear in the very short run. 4. Structural factors mitigating social impacts, labour regulations and safety nets 46. However, other factors have significant influence on the size of the effects of financial crises. For example, it appears that crises raise inequalities more in the most deregulated labour markets, and financial crises have had worse effects on Latin American workers than on Asians, and stronger adverse impacts on Asians than on the organized workers of Northern economies.73 This finding suggests that there is a crucial interaction between labour market institutions and the specific effects of financial crises. 47. One should also note that the impact of crises on inequalities depends on the existing social protection system in the country, as well as the level of public spending, which serves as an automatic stabilizer during a recession. Experiences in the OECD support this notion: during the period 2007-2009, in the OECD, the household sector in the aggregate appears to have been well protected from the impact of the downturn. This was possible because of government intervention through tax and benefit systems in most countries. 74 However, consolidation policies implemented after 2010 are likely to have a greater effect on income distribution.75 5. Impacts of government responses to crises (fiscal consolidation) 48. In most countries, financial crisis is followed by fiscal consolidation, which may also have a strong distributional impact. Several studies on OECD countries and other emerging and advanced economies have demonstrated that fiscal consolidation is usually associated with a rise of inequalities, a fall of the labour share and a rise of long-term unemployment.76 One study came to the conclusion that 15-20 per cent of the increase in inequality following a fiscal consolidation is explained by the rise of unemployment. 77 Social spending cuts are another substantial contributor to rising inequalities. A 1 per cent decrease in social spending is associated with a rise of 0.2-0.7 per cent in inequality. 78 Crises usually have strong effects on social spending, with lowest income countries being 72 73 74 75 76 77 78 See B.D. Meyer and J.X. Sullivan, “Consumption and income inequality and the great recession”, American Economic Review, vol. 103, No. 3 (2013), pp. 178-83. Ibid., p. 7. See S.P. Jenkins et al, The Great Recession and the Distribution of Household Income (Oxford, Oxford University Press, 2013). Ibid. See L. Ball et al, “The distributional effects of fiscal consolidation”, IMF working paper No. 13/151 (Washington, D.C., 2013); J. Woo et al, “Distributional effects of fiscal consolidation and the role of fiscal policy: what do the data say?” IMF working paper 13/195 (Washington, D.C., 2013). J. Woo et al, “Distributional effects of fiscal consolidation (footnote 76). Ibid. 15