RECONSTRUCTING INCOME STRATA IMPLICIT COALITIONS IN THE EU AND EFTA COUNTRIES

Abstract

The article, which aims to conduct a multi-criteria cluster analysis to classify countries by income distribution, growth, and implicit income coalition composition, allowed us to reconstruct implicit income coalitions that have benefited relatively more from economic growth. It also provided methodological advances by calculating right-wing policy indices and a centrist policy index to assess the actual social and economic policy regimes in advanced European economies. The highest right-wing policy indices were recorded in Bulgaria, the Netherlands, Poland, and Romania. The most left-wing policies were in Hungary, Greece, and Lithuania. The most centrist policies were recorded in Belgium, Croatia, and Slovakia. The highest policy polarization in favor of the richest and the poorest strata was identified in Germany and Italy. The type of policy implemented was found to have no significant impact on overall economic growth. On average, the strata in the coalition had 8 percentage points higher income growth over the analyzed 4-year period (2015-2019). This difference was generally larger in fast-growing economies. But the high correlation between the growth of coalition members and outsiders showed that outsiders also benefited significantly from economic growth, albeit to a lesser extent. With the exception of four countries outside the eurozone (Switzerland, Sweden, Norway, and Poland), economic growth was quite inclusive for outsiders and the poorest. A cluster analysis using several criteria allowed us to classify countries by income distribution, growth, and the implicit composition of the income coalition.