What Have We Learned from Cross-National Research on the Causes of Income Inequality?

Abstract

Reviews of research on the causes of income inequality often limit themselves to the United States or highly industrialized societies. The present review seeks greater generalizability across societies at all levels of development. It covers cross-national studies published since the 1960s, which draw upon a variety of theories and test them empirically, with the result that that we can now identify a broad range of important causal variables that explain variations in income inequality both across societies and over time. These variables include: economic dualism and the Kuznets inverted-U hypothesis, demographic variables, human capital theory and the influence of a population’s level of education, educational inequality, and the race between education (skill) and technology, democracy, communist rule, factors of production, labor institutions, neoliberal globalization, and the effect of the state on inequality. The review suggests which of these variables have more robust effects, and which causal effects are more contested.