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

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  • Mario Holzner

    ()
    (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.

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Bibliographic Info

Paper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Working Papers with number 93.

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Length: 18 pages including 4 Tables and 1 Figure
Date of creation: Sep 2012
Date of revision:
Publication status: Published as wiiw Working Paper
Handle: RePEc:wii:wpaper:93

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Keywords: government expenditures; taxes; income polarization; multi-level model;

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