The determinants of growing economic inequality within advanced democracies

Abstract

AbstractBeginning with the premise that rising economic inequality is an urgent problem burdening some industrialized democratic societies more than others, this paper seeks to examine the primary factors responsible. The purpose is not to provide novel empirical analysis but rather to unite siloed academic discussions and debates under a common theme, to address a problem of mutual concern. The first section frames the puzzle of economic inequality within advanced democracies. Subsequent sections review seminal contributions in five issue areas suggested as likely determinants of growing economic inequality in advanced democracies: technology, globalization, labor institutions, taxes and transfers, and the concentration of markets. I conclude by suggesting that these factors may, in fact, be separate branches of the same tree in that they are deeply intertwined with the economic systems in which they exist. Future work on economic inequality should therefore embrace the Varieties of Capitalism framework as a useful tool for understanding economic inequality.