The Drivers of Income Inequality in Rich Countries

40 Pages Posted: 28 May 2020

See all articles by Brian Nolan

Brian Nolan

Institute for New Economic Thinking at the Oxford Martin School

Luis Valenzuela

University of Oxford

Matteo G. Richiardi

University of Essex - Centre for Microsimulation and Policy Analysis,

Date Written: September 2019

Abstract

Rising income inequality has recently come centre‐stage as a core societal concern for rich countries. The diagnosis of the forces driving inequality upwards and their relative importance remain hotly contested, notably with respect to the roles of globalization versus technology and of market forces versus institutions and policy choices. This survey provides a critical review and synthesis of recent research. The focus is on income inequality across the entire distribution, rather than only on what has been happening at the very top. We pay particular attention to include what has been learned from the analysis of micro‐data, to ensure that the coverage is not unduly US‐centric and to analyses of the interrelations between the different drivers of inequality. The marked differences in inequality trends across countries and time periods reflect how global economic forces such as globalization and technological change have interacted with differing national contexts and institutions. Major analytical challenges stand in the way of a consensus emerging on the relative importance of different drivers in how income inequality has evolved in recent decades.

Keywords: Globalization, Inequality, Market power, Technology, Wage dispersion

Suggested Citation

Nolan, Brian and Valenzuela, Luis and Richiardi, Matteo G., The Drivers of Income Inequality in Rich Countries (September 2019). Journal of Economic Surveys, Vol. 33, Issue 4, pp. 1285-1324, 2019, Available at SSRN: https://ssrn.com/abstract=3608928 or http://dx.doi.org/10.1111/joes.12328

Brian Nolan (Contact Author)

Institute for New Economic Thinking at the Oxford Martin School ( email )

Eagle House
Walton Well Road
Oxford, OX2 6ED
United Kingdom
+441865610401 (Phone)

Luis Valenzuela

University of Oxford

Matteo G. Richiardi

University of Essex - Centre for Microsimulation and Policy Analysis,

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

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