The Type of Right-wing Government and the Decline of Middle-Income Strata in Industrialized Democracies

Young-hwan Byun ()

No 727, LIS Working papers from LIS Cross-National Data Center in Luxembourg

Abstract: Although the decline of middle-income strata (or polarization in income distribution) is an increasingly widespread phenomenon across industrialized democracies, it remains understudied compared to other forms of income inequality. I analyzed the decline of middle-income strata among 18 industrialized democracies between 1971 and 2010. Whereas previous research claimed that income polarization is a common development, brought upon by global market integration or skill-biased technological change, I found significant cross-country variation in the extent of polarization among the 18 cases. My findings suggest that that the type of party government—in particular, whether the dominant right-wing party is Christian or secular—is associated with divergent outcomes in the degree of income polarization. I argue that secular-right governments have facilitated income polarization by undermining centralized wage-bargaining and social-insurance benefit generosity. In contrast, by maintaining these institutional arrangements, Christian Democratic governments have tempered polarization trends in the market, resulting in relatively larger middle-income strata.

Pages: 37 pages
Date: 2018-01
New Economics Papers: this item is included in nep-ias
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Persistent link: https://EconPapers.repec.org/RePEc:lis:liswps:727

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