Income Inequality and Advanced Democracies

Abstract

Over the past several decades, social scientists from a wide range of disciplines have produced a rich body of scholarship addressing the growing phenomenon of income inequality across and within advanced capitalist democracies. As globalization intensifies some scholars are beginning to put income disparities in developed democracies into wider perspective, examining inequality in advanced economies within the framework of global income distribution. 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 an evaluative metric of either a longitudinal or a 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 in the 1950s and 1960s) or, alternatively, through cross-national comparisons (e.g., income inequality is higher in Great Britain than in Sweden). It is important to note that the lack of authoritative, 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 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 and political economists. Given the intrinsic multidisciplinarity of the subject of income inequality, this article includes research by economists and sociologists as well as political scientists. Most research on income inequality addresses one of the following areas of inquiry: (1) the causal forces driving increasing inequality in developed economies; (2) the socioeconomic effects and political consequences of income inequality; (3) the relationships between income inequality and macroeconomic conditions, such as economic growth, unemployment, and the degree of trade and internationalization of the domestic economy. The recent work by French economist Thomas Piketty, whose 2013 book (2014, English translation) sold 2. 5 million copies, warrants special comment given its comprehensive scope and influence in putting income inequality at the forefront of global debates. Lastly, a new and growing body of scholarship explores the relationship among the environment, climate change, and income inequality.