Top income shares inOECDcountries: The role of government ideology and globalisation

Abstract

This paper investigates how government ideology and globalisation are associated with top income shares in 17 OECD countries over the period 1970 to 2014. We use top income shares of the World Wealth and Income Database (WID). Globalisation is measured by the KOF index of globalisation. Static and dynamic panel model results show that the top income shares increased more under right wing governments than under left wing governments. The ideology‐induced effect was stronger when globalisation proceeded more rapidly. Globalisation was positively correlated with income shares of the upper‐middle class (P99–P90), but negatively with income shares of the rich (top 1%) in the overall sample. We show that the relationship differs between Anglo‐Saxon countries and other OECD countries. Globalisation was more pro‐rich in Anglo‐Saxon countries than in other OECD countries. Government ideology does not turn out to have a statistically significant effect on top income shares in Anglo‐Saxon countries after the 1980s, whereas ideology‐induced differences in the distributional outcomes continued in other OECD countries.

The globalisation–welfare state nexus: Evidence from Asia

“…Future research should also examine how globalisation influenced income distributions in Asia. Globalisation has been shown to increase income inequality in various samples of countries (Bergh & Nilsson, 2010a, 2010b; Dorn, Fuest & Potrafke ; Dorn & Schinke, ; Dreher & Gaston, ; Gozgor & Ranjan, ; Lang & Tavares, ). An important question is whether the social protection programmes in Asia helped to mitigate globalisation‐induced income inequality…”

Does economic globalisation affect income inequality? A meta‐analysis

“…We thus consider whether democracy variables were included in the primary studies. Finally, the political science literature has emphasised that it is relevant which parties are part of the government since their ideological leanings may lead to quite different responses to economic globalisation (e.g., Dorn & Schinke, 2018; Pontusson et al., 2002). We thus also check whether the inclusion of controls for partisan politics moderates the impact of globalisation on income inequality.…”

Do Left-wing Governments Decrease Wage Inequality among Civil Servants? Empirical Evidence from the German States

“…2 Pronounced social spending and progressive taxation under left-wing governments accompanied decreasing income inequality. The studies by Scheve and Stavasage (2009) and Dorn and Schinke (2018) show that top income shares were higher under right-wing than under left-wing governments. 3 The governments of Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States were prime examples of market-oriented policies in the 1980s.…”

“…Left-wing governments are expected to be more active in income redistribution to decrease income inequality than right-wing governments. Empirical evidence shows that top income shares increased under right-wing governments more rapidly than under left-wing governments (Scheve and Stavasage 2009;Dorn and Schinke 2018). The previous studies examining how government ideology influences income inequality used panel data for Organization for Economic Co-operation and Development (OECD) countries and univariate time series for individual OECD countries.…”