IDEAS home Printed from https://ideas.repec.org/a/oup/cambje/v42y2018i4p1009-1042..html
   My bibliography  Save this article

The determinants of income inequality in OECD countries
[Political partisanship and welfare state reform in advanced industrial societies]

Author

Listed:
  • Pasquale Tridico

Abstract

The objective of this paper is to identify the determinants of the increase in income inequality that OECD countries have experienced over the past two decades. My hypothesis is that along with the financialisation of economies that has taken place since 1990, inequality increased because labour flexibility intensified, labour market institutions weakened as trade unions lost power, and public social spending started to retrench and did not compensate for the vulnerabilities created by the globalisation process. Using data from 25 high-income OECD countries from 1990 to 2013, I empirically evaluate this hypothesis. My results clearly suggest that the increase in inequality over the past two decades is caused by an increase in financialisation, a deepening of labour flexibility, the weakening of trade unions and the retrenchment of the welfare state.

Suggested Citation

  • Pasquale Tridico, 2018. "The determinants of income inequality in OECD countries [Political partisanship and welfare state reform in advanced industrial societies]," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 42(4), pages 1009-1042.
    • Handle: RePEc:oup:cambje:v:42:y:2018:i:4:p:1009-1042.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/cje/bex069
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Thomas Goda & Photis Lysandrou, 2014. "The contribution of wealth concentration to the subprime crisis: a quantitative estimation," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(2), pages 301-327.
    2. Francesca Gastaldi & Paolo Liberati, 2011. "Economic integration and government size: a review of the empirical literature," Financial Theory and Practice, Institute of Public Finance, vol. 35(3), pages 327-384.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Photis Lysandrou, 2016. "The colonization of the future: An alternative view of financialization and its portents," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 39(4), pages 444-472, October.
    2. Jlenia Di Noia, 2024. "When firms buy corporate bonds: an agent-based approach to credit within firms," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 19(4), pages 689-725, October.
    3. Botta, Alberto & Caverzasi, Eugenio & Russo, Alberto, 2024. "Same old song: On the macroeconomic and distributional effects of leaving a Low Interest Rate Environment," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 552-570.
    4. Philipp Kirchner, 2020. "On shadow banking and fiÂ…nancial frictions in DSGE modeling," MAGKS Papers on Economics 202019, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    5. Thomas Goda & Özlem Onaran & Engelbert Stockhammer, 2014. "A case for redistribution? Income inequality and wealth concentration in the recent crisis," Documentos de Trabajo de Valor Público 12186, Universidad EAFIT.
    6. Grahame F. Thompson, 2020. "Deal or no deal? Some reflections on the ‘Baker-Thompson rule,’ ‘matching,’ and ‘market design’," Journal of Cultural Economy, Taylor & Francis Journals, vol. 13(5), pages 652-662, September.
    7. Thomas Goda & Özlem Onaran & Engelbert Stockhammer, 2017. "Income Inequality and Wealth Concentration in the Recent Crisis," Development and Change, International Institute of Social Studies, vol. 48(1), pages 3-27, January.
    8. Photis Lysandrou, 2022. "The European banks’ role in the financial crisis of 2007-8: a critical assessment," New Political Economy, Taylor & Francis Journals, vol. 27(5), pages 879-894, September.
    9. Shapor, Maria (Шапор, Мария), 2023. "Modern trends and problems of income inequality in an open economy [Современные Тенденции И Проблемы Неравенства Уровня Доходов В Условиях Открытой Экономики]," Working Papers w20220253, Russian Presidential Academy of National Economy and Public Administration.
    10. Thomas Goda & Alejandro Torres, 2015. "Class or location? What explains the rising tide of absolute global income inequality during 1850-2010?," Documentos de Trabajo de Valor Público 12663, Universidad EAFIT.
    11. Eugenio Caverzasi & Daniele Tori, 2018. "The Financial Innovation Hypothesis: Schumpeter, Minsky and the sub-prime mortgage crisis," Working Papers PKWP1815, Post Keynesian Economics Society (PKES).
    12. Thomas Goda, 2014. "Global trends in relative and absolute wealth concentrations," Documentos de Trabajo de Valor Público 10897, Universidad EAFIT.
    13. Alberto Botta & Eugenio Caverzasi & Daniele Tori, 2015. "Financial–Real-Side Interactions in an Extended Monetary Circuit with Shadow Banking: Loving or Dangerous Hugs?," International Journal of Political Economy, Taylor & Francis Journals, vol. 44(3), pages 196-227, July.
    14. Daniele Tori & Eugenio Caverzasi & Mauro Gallegati, 2023. "Financial production and the subprime mortgage crisis," Journal of Evolutionary Economics, Springer, vol. 33(2), pages 573-603, April.
    15. Hanna Karolina Szymborska, 2022. "Rethinking inequality in the 21st century – inequality and household balance sheet composition in financialized economies," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 45(1), pages 24-72, January.
    16. Lysandrou, Photis & Shabani, Mimoza, 2017. "The Greenspan conundrum of 2005-7 and the acceleration in US ABCP supply: a single ‘reach for yield’ story," MPRA Paper 79917, University Library of Munich, Germany.
    17. Photis Lysandrou & Anastasia Nesvetailova, 2013. "The Shadow Banking System and the Financial Crisis:A securities production function view," Working papers wpaper05, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    18. Sefa Awaworyi Churchill & Mehmet Ugur & Siew Ling Yew, 2017. "Does Government Size Affect Per-Capita Income Growth? A Hierarchical Meta-Regression Analysis," The Economic Record, The Economic Society of Australia, vol. 93(300), pages 142-171, March.
    19. Thomas Goda, 2013. "The role of income inequality in crisis theories and in the subprime crisis," Working Papers PKWP1305, Post Keynesian Economics Society (PKES).
    20. Photis Lysandrou & Mimoza Shabani, 2018. "The explosive growth of the ABCP market between 2004 and 2007: A “search for yield” story," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 41(4), pages 526-546, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:cambje:v:42:y:2018:i:4:p:1009-1042.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/cje .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.