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Inequality: traditional drivers and the role of union power

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  • Florence Jaumotte
  • Carolina Osorio Buitron

Abstract

We examine the factors explaining the increase in gross and net income inequality in advanced economies since the 1980s. Our results support the view that globalization, technological progress, financial deregulation and lower top marginal tax rates are associated with higher inequality, and we find that the relation between the decline in union density and the rise in top decile income shares—a phenomenon which labour economists have long been discussing—is widespread across advanced economies. The influence of union density on top income shares appears to be causal, as evidenced by our instrumental variable estimates and the inclusion of potentially omitted variables.

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  • Florence Jaumotte & Carolina Osorio Buitron, 2020. "Inequality: traditional drivers and the role of union power," Oxford Economic Papers, Oxford University Press, vol. 72(1), pages 25-58.
    • Handle: RePEc:oup:oxecpp:v:72:y:2020:i:1:p:25-58.
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    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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