Panoeconomicus 2016 Volume 63, Issue 2, Pages: 231-258
https://doi.org/10.2298/PAN1602231J
Full text ( 479 KB)
Cited by
Redistribution and transmission mechanisms of income inequality - panel analysis of the affluent OECD countries
Josifidis Kosta (Faculty of Economics, Novi Sad)
Dragutinović-Mitrović Radmila (Faculty of Economics, Belgrade)
Supić Novica (Faculty of Economics, Novi Sad)
Glavaški Olgica (Faculty of Economics, Novi Sad)
The aim of this paper is to point out the limitations of conventional
approaches, articulated via political processes, in reducing income
inequality. Using the panel data methods, on the sample of 21 affluent OECD
countries in the period from 1980 to 2011, it is observed that the increase
in labour productivity as well as preferences of voters to parties that
advocate greater redistribution, contrary to common perception, not
necessarily lead to reduction in income inequality. Increasing dominance of
big capital in the field of technological progress changes the conventions
about contribution of workers to labour productivity. The result is a
weakening of workers’ bargaining power in relation to employers as well as
increase in gap between labour productivity growth and real wage growth,
which both lead to increase in income inequality. In comparison with the
other political parties, it seems that the right-wing parties are more
efficient in using voters’ support to implement their concept of the welfare
state, which contributes to maintaining the high market-generated income
inequality. Such situation could be explained that de jure power of the
government depends on election results, whereas de facto power depends on the
support of so-called globally-oriented super elites.
Keywords: income inequality, redistribution, Voters’ preferences, productivity
Projekat Ministarstva
nauke Republike Srbije, br. 47010