THE RISE OF INCOME INEQUALITY IN OECD COUNTRIES

Pasquale Tridico

No 201, Departmental Working Papers of Economics - University 'Roma Tre' from Department of Economics - University Roma Tre

Abstract: The objective of this paper is to identify the determinants of the increase in income inequality that rich countries have experienced over the last two decades. My hypothesis is that along with the financialisation of economies that has taken place since 1990, inequality increased because labour flexibility intensified, labour market institutions weakened as trade unions lost power, and public social spending started to retrench and did not compensate the vulnerabilities created by the globalization process. Using data from 34 OECD countries from 1990 to 2013, I empirically evaluate this hypothesis. My results clearly suggest that the increase in inequality over the last two decades is caused by an increase in financialisation, a deepening of labour flexibility, the weakening of trade unions, and the retrenchment of the welfare state.

Keywords: inequality; financialisation; labour market; welfare states (search for similar items in EconPapers)
JEL-codes: F60 G01 I38 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-eec and nep-hme
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:rtr:wpaper:0201

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