IDEAS home Printed from https://ideas.repec.org/p/osf/socarx/vyrz7_v1.html
   My bibliography  Save this paper

Determinants of Income Composition Inequality

Author

Listed:
  • Petrova, Bilyana
  • Ranaldi, Marco

Abstract

This paper examines the political determinants of income composition inequality in 32 advanced and emerging economies between 2006 and 2018. Income composition inequality is defined as the extent to which the income composition in capital and labor income is unevenly distributed across the income distribution. High levels of income composition inequality are associated with class-fragmented societies, whereas low levels are typical of multiple-sources-of-income societies. We find that a higher seat share of left parties in the governing coalition and higher globalization, as measured by trade, capital openness, and FDI inflows, are linked to lower income composition inequality. Higher economic development and a higher capital income share are, instead, related to higher inequality in income composition. We discuss the mechanisms behind these relationships and check the robustness of our findings. To our knowledge, this is one of the first studies looking into the causes of the dynamics of this dimension of economic inequality. (Stone Center on Socio-Economic Inequality Working Paper)

Suggested Citation

  • Petrova, Bilyana & Ranaldi, Marco, 2021. "Determinants of Income Composition Inequality," SocArXiv vyrz7_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:vyrz7_v1
    DOI: 10.31219/osf.io/vyrz7_v1
    as

    Download full text from publisher

    File URL: https://osf.io/download/60b660c09096b701f263c7bb/
    Download Restriction: no
    File URL: https://libkey.io/10.31219/osf.io/vyrz7_v1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Thomas Blanchet & Lucas Chancel & Amory Gethin, 2019. "How Unequal is Europe? Evidence from Distributional National Accounts, 1980-2017," World Inequality Lab Working Papers hal-02877000, HAL.
    2. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 465-490.
    3. Rudy Fichtenbaum, 2011. "Do Unions Affect Labor's Share of Income: Evidence Using Panel Data," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(3), pages 784-810, July.
    4. David Autor & David Dorn & Lawrence F Katz & Christina Patterson & John Van Reenen, 2020. "The Fall of the Labor Share and the Rise of Superstar Firms [“Automation and New Tasks: How Technology Displaces and Reinstates Labor”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 645-709.
    5. Yonatan Berman & Branko Milanovic, 2020. "Homoploutia: Top Labor and Capital Incomes in the United States, 1950-2020," LIS Working papers 806, LIS Cross-National Data Center in Luxembourg.
    6. Andreas Fagereng & Luigi Guiso & Davide Malacrino & Luigi Pistaferri, 2020. "Heterogeneity and Persistence in Returns to Wealth," Econometrica, Econometric Society, vol. 88(1), pages 115-170, January.
    7. Roberto Iacono & Elisa Palagi, 2020. "Still the lands of equality? On the heterogeneity of individual factor income shares in the Nordics," LEM Papers Series 2020/13, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    8. Milanovic, Branko, 2015. "Increasing capital income share and its effect on personal income inequality," MPRA Paper 67661, University Library of Munich, Germany.
    9. Garrett, Geoffrey, 1998. "Global Markets and National Politics: Collision Course or Virtuous Circle?," International Organization, Cambridge University Press, vol. 52(4), pages 787-824, October.
    10. Jacob S. Hacker & Paul Pierson, 2010. "Winner-Take-All Politics: Public Policy, Political Organization, and the Precipitous Rise of Top Incomes in the United States," Politics & Society, , vol. 38(2), pages 152-204, June.
    11. Roberto Iacono & Marco Ranaldi, 2018. "Sources of Inequality in Italy," Working Papers 479, ECINEQ, Society for the Study of Economic Inequality.
    12. Giacomo Gabbuti, 2018. "Labour Shares and Income Inequality: Insights from Italian Economic History, 1895-2015," HHB Working Papers Series 13, The Historical Household Budgets Project.
    13. Carlotta Balestra & Richard Tonkin, 2018. "Inequalities in household wealth across OECD countries: Evidence from the OECD Wealth Distribution Database," OECD Statistics Working Papers 2018/01, OECD Publishing.
    14. Basinger, Scott J. & Hallerberg, Mark, 2004. "Remodeling the Competition for Capital: How Domestic Politics Erases the Race to the Bottom," American Political Science Review, Cambridge University Press, vol. 98(2), pages 261-276, May.
    15. A. B. Atkinson, 2009. "Factor shares: the principal problem of political economy?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 25(1), pages 3-16, Spring.
    16. Bengtsson, Erik & Waldenström, Daniel, 2018. "Capital Shares and Income Inequality: Evidence from the Long Run," The Journal of Economic History, Cambridge University Press, vol. 78(3), pages 712-743, September.
    17. Hutter, Swen & Kriesi, Hanspeter, 2019. "Politicizing Europe in times of crisis," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 26(7), pages 996-1017.
    18. Iacono Roberto & Palagi Elisa, 2022. "Still the Lands of Equality? Heterogeneity of Income Composition in the Nordics, 1975–2016," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 22(2), pages 221-268, April.
    19. Arjun Jayadev, 2007. "Capital account openness and the labour share of income," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 31(3), pages 423-443, May.
    20. , Stone Center & Lindh, Arvid & McCall, Leslie, 2020. "Class Position and Political Opinion in Rich Democracies," SocArXiv wt5qx, Center for Open Science.
    21. World Bank, 2010. "World Development Indicators 2010," World Bank Publications - Books, The World Bank Group, number 4373.
    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. Petrova, Bilyana & Ranaldi, Marco, 2021. "Determinants of Income Composition Inequality," SocArXiv vyrz7, Center for Open Science.
    2. Marco Ranaldi, 2022. "Income Composition Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 139-160, March.
    3. Ranaldi, Marco & Milanović, Branko, 2022. "Capitalist systems and income inequality," Journal of Comparative Economics, Elsevier, vol. 50(1), pages 20-32.
    4. Fisher, Carolyn & Ranaldi, Marco, 2025. "Compositional Inequality: Measurement, Stylized Facts, and Theoretical Aspects," SocArXiv 75ghp_v2, Center for Open Science.
    5. Ranaldi, Marco, 2021. "Global Distributions of Capital and Labor Incomes: Capitalization of the Global Middle Class," SocArXiv 3g59r, Center for Open Science.
    6. Cícero, Vinicius Curti & Lima, Gilberto Tadeu, 2023. "Functional distribution of income as a determinant of importing behavior: An empirical analysis," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 393-405.
    7. Roberto Iacono & Elisa Palagi, 2020. "Still the lands of equality? On the heterogeneity of individual factor income shares in the Nordics," LEM Papers Series 2020/13, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    8. Kraft, Kornelius & Lammers, Alexander, 2021. "Bargaining Power and the Labor Share - a Structural Break Approach," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242342, Verein für Socialpolitik / German Economic Association.
    9. Benjamin Moll & Lukasz Rachel & Pascual Restrepo, 2022. "Uneven Growth: Automation's Impact on Income and Wealth Inequality," Econometrica, Econometric Society, vol. 90(6), pages 2645-2683, November.
    10. Bom, Pedro R.D. & Erauskin, Iñaki, 2022. "Productive government investment and the labor share," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 347-363.
    11. Tarek Benjamin Moll & Lukasz Rachel & Pascual Restrepo, 2019. "Uneven Growth: Automation’s Impact on Income and Wealth Inequality," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-333, Boston University - Department of Economics.
    12. Roberto Iacono & Marco Ranaldi, 2018. "Sources of Inequality in Italy," Working Papers 479, ECINEQ, Society for the Study of Economic Inequality.
    13. Bukowski, Pawel & Novokmet, Filip, 2019. "Between communism and capitalism: long-term inequality in Poland, 1892-2015," LSE Research Online Documents on Economics 102834, London School of Economics and Political Science, LSE Library.
    14. Bukowski, Pawel & Novokmet, Filip, 2019. "Between communism and capitalism: long-term inequality in Poland, 1892-2015," LSE Research Online Documents on Economics 102814, London School of Economics and Political Science, LSE Library.
    15. Dilyana Dimova, 2019. "The Structural Determinants of the Labor Share in Europe," IMF Working Papers 2019/067, International Monetary Fund.
    16. Edmond Berisha & John Meszaros, 2020. "Long-Term Rates, Capital Shares, and Income Inequality," Open Economies Review, Springer, vol. 31(3), pages 619-635, July.
    17. Bartels, Charlotte & Kersting, Felix & Wolf, Nikolaus, 2021. "Testing Marx. Income Inequality, Concentration, and Socialism in Late 19th Century Germany," SocArXiv 5y9wf_v1, Center for Open Science.
    18. Kyoji Fukao & Cristiano Perugini, 2021. "The Long‐Run Dynamics of the Labor Share in Japan," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(2), pages 445-480, June.
    19. Pawel Bukowski & Filip Novokmet, 2019. "Between Communism and Capitalism: Long-Term Inequality in Poland, 1892- 2015," World Inequality Lab Working Papers hal-02876995, HAL.
    20. Federico Riccio & Lorenzo Cresti & Maria Enrica Virgillito, 2022. "The labour share along global value chains. Perspectives and evidence from sectoral interdependence," LEM Papers Series 2022/11, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

    More about this item

    Statistics

    Access and download statistics

    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:osf:socarx:vyrz7_v1. 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: OSF (email available below). General contact details of provider: https://arabixiv.org .

    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.