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Institutions, Partisanship, and Inequality in the Long Run

  • Kenneth Scheve (a1) and David Stasavage (a2)

It has been widely suggested by political scientists and economists, based on empirical evidence for the period since 1970, that the institution of centralized wage bargaining and the presence of a government of the left are associated with lower levels of income inequality. The authors make use of new data on top income shares as well as long-run series on wage inequality to examine the effects of partisanship and wage bargaining over a much longer time period, nearly the entire twentieth century. Their empirical results provide little support for the idea that either of these two factors is correlated with income inequality over this period. They then show that a closer look at the introduction of centralized wage bargaining in individual countries during the middle part of the twentieth century reveals that in countries that moved to centralize wage bargaining, income inequality had already been trending downward well before the institutional change, that the move to centralized bargaining did not alter this trend, and that these changes in income inequality were also observed in countries that did not adopt centralized wage bargaining at this time. The results suggest that there were alternative institutional paths to reduced income inequality during most of the twentieth century. This raises the possibility that either structural economic changes or commonly shared economic and political events, such as world wars and economic crises, may ultimately be more important for understanding the evolution of income inequality than are the institutional or partisan characteristics commonly considered to be decisive by political scientists.

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* We would like to thank thomas Piketty for useful suggestions at the time we were developing this article, as well as for sharing the data on top income shares. Jesper Roine and Daniel Waldenstrthad dunning, Miriam golden, stephen haber, James honaker, torben Iversen, Peter Katzenstein, andrew leigh, david Mayhew, adam Przeworski, ron rogowski, david soskice, Peter swenson, daniel Waldenström, three anonymous referees, and seminar participants at columbia, new york university, notre dame, Penn state, Princeton, stanford, Wisconsin, and Yale for comments on an initial draft. We are grateful to the Institution for Social and Policy Studies and MacMillan Center for International and Area Studies at Yale university for financial support for this project. Xiaobo Lu and Kaj Thomsson provided invaluable research assistance.

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World Politics
  • ISSN: 0043-8871
  • EISSN: 1086-3338
  • URL: /core/journals/world-politics
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