The Determinants of Income Polarization on the Household and Country Level across the EU

Mario Holzner

No 93, wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw

Abstract: A multi-level approach to test for the determinants of income polarization both at the household as well as the country level is applied to a panel of about 300,000 households in EU countries over the period of 2003-2009. Among the policy relevant macro variables, higher progressive labour taxation and to a certain extent capital taxation is positively correlated with lower levels of income polarization. Also public expenditures on social protection, education and economic subsidies are related to a lower degree of polarization. Finally, lower unemployment, a stronger industrial base and more trade openness are also associated with lower levels of polarization.

Keywords: government expenditures; taxes; income polarization; multi-level model (search for similar items in EconPapers)
JEL-codes: D63 H23 H5 (search for similar items in EconPapers)
Pages: 18 pages including 4 Tables and 1 Figure
Date: 2012-09
New Economics Papers: this item is included in nep-pbe
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