Diverse disparities: The politics and economics of wage, market and disposable income inequalities

Arbeitspapier

This paper analyzes the evolution of inequality and its determinants across different forms of income. A number of results emerge from this effort. First, OECD countries have been and continue to be much more diverse in their distributions of earnings and disposable income than they are in their distributions of market income. Second, the larger cross-national variation in the distributions of earnings and disposable income can be attributed to the role of political actors (such as unions and, more importantly, political parties) and economic institutions that allow actors to coordinate their activities. Third, the transmission of cross-national differences in wage inequality into market-based inequality appears to be muted relative to economic and demographic transformations that have gone on within the OECD countries. Fourth, the way in which political parties are able to pursue their goals varies across forms of income. Political parties’ capacity to shape the distribution of earnings is contingent on the degree of wage bargaining coordination. Absent coordination between labor and capital, right-wing policy works to modestly increase inequality. Alternatively, the egalitarian efforts of left-wing parties have the undesired effect of raising earnings inequality. In contrast, when labor market actors are able to coordinate, left-wing policy reinforces the egalitarian effects of coordination whereas the impact of right-wing policy is institutionally constrained. In turn, political parties affect directly the distribution of disposable income through their choices about fiscal redistribution.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. SP II 2004-08

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policy ; Wage Level and Structure; Wage Differentials ; Wages, Compensation, and Labor Costs: Public Policy
• Subject: Income Inequality ; Partisan Politics ; Institutions ; Varieties of Capitalism ; Redistribution

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Beramendi, Pablo ; Cusack, Thomas R.
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/51228
• Last update: 10.03.2025, 11:44 AM CET