In This Article Income Inequality and Advanced Democracies

  • Introduction
  • General Overviews
  • Databases and Reports
  • Economic Growth and Income Inequality
  • Sociopolitical Effects and Economic Consequences of Income Inequality

Political Science Income Inequality and Advanced Democracies
by
Vicki L. Birchfield
  • LAST REVIEWED: 04 May 2015
  • LAST MODIFIED: 27 March 2014
  • DOI: 10.1093/obo/9780199756223-0099

Introduction

Over the past several decades, social scientists from a wide range of disciplinary perspectives have produced a rich body of scholarship addressing the growing phenomenon of income inequality across and within advanced capitalist democracies. As an object of inquiry, income inequality must be distinguished from the presumably more value-neutral term, income distribution, which has been studied since the origins of classical economics. How one derives a judgment about whether or not a given society’s income distribution is characterized by inequality requires some type of evaluative metric of either a longitudinal or cross-sectional nature. Generally speaking and to side-step explicitly normative questions—the relative degree of inequality may be empirically assessed by temporal or longitudinal comparisons for single country studies (e.g., income distribution in the United States is more unequal now than it was in the 1950s and 1960s) or, alternatively, through cross-national comparisons (e.g., income inequality in Great Britain is higher than income inequality in Sweden). It is important to note that the lack of authoritative and genuinely comparable cross-national data until relatively recently impeded progress of this latter category of research. As a result, systematic investigations of income inequality or patterns of income distribution and redistribution tended to be the exclusive domain of economists or sociologists and mostly focused on the United States. Within the past decade, however, political scientists—especially comparative political economists—have mined new databases and generated an impressive body of literature that moves research beyond a narrow focus on single-country studies to rigorous cross-national and time-series analyses and into new theoretical directions engaging the classic, paradigmatic questions of “who gets what, when, and how” that have long exercised the minds of students of politics. As this entry is one of political science, the literature mapped out here confines itself as much as possible to this topic, but given the inherently multidisciplinary nature of a subject like income inequality, some research produced by economists and sociologists is necessarily included, particularly when it has been a central focus or even a driver of debates and investigations by political scientists. Although research on income inequality and advanced democracies could be organized in a number of ways, the vast array of scholarship revolves around one of the following three questions: (a) What are the causal forces behind the trend of increasing inequality in developed economies? (b) What are the socioeconomic effects and political consequences of growing income inequality? (c) What are the relationships between income inequality and macroeconomic conditions such as economic growth, unemployment, and the degree of trade and internationalization of the domestic economy?

General Overviews

Given the complexity and multidisciplinary nature of a subject like income inequality, unsurprisingly there are no general introductions to the literature or journal articles that comprehensively survey the research on income inequality and advanced democracies. One exception is the early overview Gottschalk and Smeeding 1997 pointing to the paltry and inadequate nature of the research at that point in time and more recently Brandolini and Smeeding 2006, which presents an overview of the aggregate data and discusses methodological and technical issues related to different measures of income inequality. Neither of these, however, provides a thorough discussion of the scholarly literature. The only two book-length studies by political scientists that specifically address the subject of income inequality and advanced democracies, and do so in broad comparative perspective with thorough discussions of the existing literature, are Birchfield 2008 and Pontusson 2005. Two monographs that might serve as gateways to the state of research on income inequality, albeit from very different prisms, are the tour de force analysis in Atkinson 2009, which draws together new data and case studies of twenty Organisation for Economic Co-operation and Development (OECD) countries, and the more global overview in Firebaugh 2003, which provides substantial discussion on measurement issues as well as commentary on income inequality research more broadly. Sociologist Lane Kenworthy offers an excellent overview as well as original analyses of the complex relationships between growth, income inequality, and employment in Kenworthy 2004. Finally, the latest publication (though by an economist, not a political scientist) to date that provides both a critique of previous research and inequality measurements as well as a comprehensive review of previous debates about the drivers of income inequality in the United States, Europe, and globally is Galbraith 2012.

  • Atkinson, A. B. The Changing Distribution of Earnings in OECD Countries. Oxford: Oxford University Press, 2009.

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    Assembling new and previously underutilized sources of data, this study challenges conventional wisdom that growing income inequality is a new phenomenon and shows that the entire 20th century has been marked by patterns of compression and expansion in earnings and that technological progress does not necessarily result in greater income dispersion.

  • Birchfield, Vicki. L. Income Inequality in Capitalist Democracies: The Interplay of Values and Institutions. University Park: Pennsylvania State University Press, 2008.

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    Employs both quantitative and qualitative methods to examine the variation in rising income inequality among a set of sixteen advanced democracies and explains differences among those countries in terms of the varying and interactive effects of political institutions and societal values.

  • Brandolini, Andrea, and Timothy M. Smeeding. “Patterns of Economic Inequality in Western Democracies: Some Facts on Levels and Trends.” PS: Political Science & Politics 39.1 (2006): 21–26.

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    This article reviews and analyzes trends and levels in income inequality in rich democracies and documents the methodological differences underlying the diverse patterns of income inequality across affluent countries.

  • Firebaugh, Glenn. The New Geography of Global Income Inequality. Cambridge, MA: Harvard University Press, 2003.

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    This book puts forth the thesis that global income inequality between nations is actually decreasing, while inequality within nations is increasing.

  • Galbraith, James K. Inequality and Instability: A Study of the World Economy Just Before the Great Crisis. New York: Oxford University Press, 2012.

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    Pathbreaking analysis of global inequality that challenges conventional ideas of the common drivers of inequality while emphasizing the need for new measures and better data. Posits and shows evidence of the impact of finance-driven technological change as a causal mechanism behind increasing inequality worldwide.

  • Gottschalk, Peter, and Timothy M. Smeeding. “Cross-National Comparisons of Earnings and Income Inequality.” Journal of Economic Literature 35.2 (1997): 633–687.

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    Overview of the stylized facts culled from research addressing income inequality in cross-national perspective. Authors argued that much of the research at that point did not stand up to methodological scrutiny and pointed to the need for a unifying theoretical structure to guide cross-national research, thereby significantly influencing the subsequent scholarship, particularly in comparative political economy.

  • Kenworthy, Lane. Egalitarian Capitalism: Jobs, Incomes, and Growth in Affluent Countries. New York: Russell Sage Foundation, 2004.

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    Although broader in scope than a strict focus on income inequality, the author explores many of the classic questions surrounding the causes of growing income inequality in capitalist democracies and offers a counterpoint to the dominant thesis about tradeoffs between prosperity and equality.

  • Pontusson, Jonas. Inequality and Prosperity: Social Europe and Liberal America. Ithaca, NY: Cornell University Press, 2005.

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    A defining work from a comparative political economy perspective examining income inequality within two models of political economy—market liberalism of the United States and Britain and the social market capitalism of northern Europe. Empirical analyses show the decisive role of policies and institutions in explaining variations in inequality.

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