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Top Income Shares in OECD Countries: The Role of Government Ideology and Globalization

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  • Florian Dorn
  • Christoph Schinke

Abstract

This paper investigates how government ideology and globalization are associated with top income shares in 17 OECD countries over the period 1970 to 2014. We use top income shares of the World Wealth and Income Database (WID). Globalization is measured by the KOF index of globalization. Static and dynamic panel model results show that the top income shares increased more under rightwing governments than under leftwing governments. The ideology-induced effect was stronger when globalization proceeded more rapidly. Globalization was positively correlated with income shares of the upper-middle class (P99-P90), but negatively with income shares of the rich (top 1%) in the overall sample. We show that the relationship differs between AngloSaxon countries and other OECD countries. Globalization was more pro-rich in AngloSaxon countries than in other OECD countries. Government ideology does not turn out to have a statistically significant effect on top income shares in Anglo-Saxon countries after the 1980s, whereas ideology-induced differences in the distributional outcomes continued in other OECD countries.

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  • Florian Dorn & Christoph Schinke, 2018. "Top Income Shares in OECD Countries: The Role of Government Ideology and Globalization," ifo Working Paper Series 246, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
  • Handle: RePEc:ces:ifowps:_246
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    Cited by:

    1. Florian Dorn & Clemens Fuest & Niklas Potrafke, 2017. "Globalisation and Income Inequality Revisited," European Economy - Discussion Papers 2015 - 056, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    2. Niklas Potrafke, 2019. "The globalisation–welfare state nexus: Evidence from Asia," The World Economy, Wiley Blackwell, vol. 42(3), pages 959-974, March.
    3. repec:kap:openec:v:30:y:2019:i:3:d:10.1007_s11079-018-9513-0 is not listed on IDEAS

    More about this item

    Keywords

    Income inequality; top income shares; partisan theory; government ideology; globalization; panel data models; Anglo-Saxon countries;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • H80 - Public Economics - - Miscellaneous Issues - - - General
    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative

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