François Nielsen

Globalization and the Great U-Turn: Income Inequality Trends in 16 OECD Countries

The debate on the resurgence of income inequality in some advanced industrial societies has often focused on the impact of an increasingly integrated world economy, typified by growing capital mobility, heightened international competition, and an increase in migration. This study represents one of the first systematic, cross‐national examinations of the role of globalization in the inequality “U-turn.” Results indicate, on the one hand, that total inequality variation is principally affected by the percentage of the labor force in agriculture, followed by the institutional factors union density and decommodification, and only then by globalization. On the other hand, longitudinal variation in inequality, while still dominated by the percentage of the labor force in agriculture, is also principally affected by aspects of globalization, such as southern import penetration and direct investment outflow, and to a lesser extent by migration. In other words, globalization explains the longitudinal trend of increasing inequality that took place within many industrial countries better than it does cross‐sectional inequality differences among countries.

Determinants of relative poverty in advanced capitalist democracies

Using relative poverty measures based on micro-level data from the Luxembourg Income Study, in conjunction with pooled time-series data for 14 advanced capitalist democracies between 1970 and 1997, the authors analyze separately the rate of pretax/transfer poverty and the reduction in poverty achieved by systems of taxes and transfers. Socioeconomic factors, including de-industrialization and unemployment, largely explain pre-tax/transfer poverty rates of the working-age population in these advanced capitalist democracies. The extent of redistribution (measured as poverty reduction via taxes and transfers) is explained directly by welfare state generosity and constitutional structure (number of veto points) and the strength of the political left, both in unions and in government.

Income Inequality, Development, and Dependence: A Reconsideration

We reconsider the role of foreign investment in income inequality in light of recent critiques that question the results of quantitative cross-national research on foreign capital penetration. We analyze an unbalanced cross-national data set in which countries contribute different numbers of observations, with a maximum of 88 countries and 488 observations, dated from 1967 to 1994. Random-effects regression models that control for unmeasured country heterogeneity are used to investigate effects of foreign capital penetration on inequality (measured as the Gini coefficient) against the background of an internal-developmental model of inequality. We adapt Firebaughs (1992, 1996) critique of the literature on the effect of foreign investment on economic growth to the study of income inequality and find that the stock of foreign direct investment has an effect on inequality that is independent of the mechanisms identified by Firebaugh. We explore Tsais (1995) claim that the effect of foreign capital penetration is spurious and find that foreign stock has a significant positive effect on inequality net of region-specific differences. An alternative interpretation of the findings of the foreign investment/inequality literature is discussed in light of the discovery of an inverted-U shaped relationship between income inequality and foreign investment stock per capita. We conclude that thinking on the relationship between income inequality and investment dependence should be revised in light of an investment-development path relating the inflow and outflow of foreign capital to economic development.

The Kuznets curve and the Great U-turn : Income inequality in U.S. counties, 1970 to 1990

The authors examine the determinants of inequality in the distribution of family income in approximately 3,100 counties of the United States in 1970, 1980, and 1990. Such a study provides a window on global trends in social inequality during the period, which spans the tail end of the Kuznets curve and the more recent upswing in income inequality. Results from random-effects regression models that control for unmeasured heterogeneity among states reveal the continued importance of the Kuznetsian pattern of declining inequality with economic development, a positive effect of urbanization on inequality, a declining positive impact of sector dualism, an increasing positive effect of educational heterogeneity, and a persistent effect of racial dualism. Several variables associated with the recent upswing in inequality have significant effects : female labor-force participation (negative), female-headed households (positive), percent of the population over age 65 (changes from positive to negative over the period), manufacturing employment (negative), and unemployment (ambiguous). They also discuss methods of estimating the Gini coefficient for income inequality at the county level and measures of sector (farm/nonfarm) dualism, racial (Black/White) dualism, and educational heterogeneity

Politics and Inequality in Latin America and the Caribbean

This article presents the first pooled time series analysis of the impact that politics and policy have on inequality in Latin America and the Caribbean. The authors build on models consisting of sociological and economic variables, adding the strength of the democratic tradition, long-term legislative partisan political power distribution, and social spending to explain variation in inequality. They analyze an unbalanced pooled time series data set for income distribution in 18 Latin American and Caribbean countries from 1970 to 2000. They show that the political variables add explanatory power. A strong record of democracy and a left-leaning legislative partisan balance are associated with lower levels of inequality, as are social security and welfare spending under democratic regimes. Thus, they replicate some and modify other well-established findings from studies of Organization for Economic Cooperation and Development (OECD) countries in the very different context of Latin America and the Caribbean. They confirm that the partisan composition of government matters, and show that, in contrast to OECD countries, where social security and welfare spending consistently reduce inequality, such spending reduces inequality only in a democratic context in Latin America and the Caribbean.

Bilingualism and Hispanic scholastic achievement: Some baseline results

Abstract The effects of background characteristics and language factors on scholastic achievement are estimated for four groups: Hispanic bilinguals, Hispanic English monolinguals, white bilinguals, and white English monolinguals. For both bilingual samples, proficiency in both English and the other language is positively related to achievement, but frequent use of the non-English language is negatively associated with achievement. The longer the family has resided in the United States, the lower school achievement. Although the process is generally similar for Hispanic bilinguals and other language minorities, some of the results suggest a specific handicap associated with Hispanic minority status.

Toward a Theory of Ethnic Solidarity in Modern Societies

Ethnic resurgences in modern societies are examined within the framework of a general model of collective action, of which ethnic collective action is a particular instance. Social trends associated with industrialization may affect groups in such a way that ethnicity becomes a more convenient basis for mobilization than others, e.g., class. In such cases, ethnic solidarity is a natural outcome of development. Historical scenarios associated with this possibility are discussed.

Changing patterns of income inequality in U.S. counties, 1970-2000.

The upswing in economic inequality that has affected a number of advanced industrial societies in the late 20th century has been particularly conspicuous in the United States. The authors explore its causes using data on the distribution of family income in 3,098 U.S. counties in 1970, 1980, 1990, and 2000. The authors build a model of within‐county income inequality that assumes that distribution processes involving labor market and sociodemographic variables operate primarily at the county level and those involving the political and institutional context operate primarily at the state level. Multilevel methods are used to distinguish county cross‐sectional, state cross‐sectional, and longitudinal effects on inequality. The authors find that, when features of the state‐level institutional and political context are associated with inequality, these effects are larger longitudinally than cross‐sectionally. A range of other factors, including economic development, labor force changes, shifts in the racial/ethnic and gender composition of the labor force, educational expansion, and urbanization are found to have comparatively large effects, both longitudinally and cross‐sectionally.

Exactly how has income inequality changed? : Patterns of distributional change in core societies

The recent resurgence of income inequality in some of the core societies has spawned a wide-ranging debate as to the culprits. Progress in this debate has been complicated by the fact that many of the theories that have been developed to account for the inequality upswing imply radically different patterns of distributional change, while predicting the same outcome in terms of the behavior of standard summary measures (e.g. a rise in the Gini coefficient or in Theil’s inequality). Handcock and Morris (1999) have developed methods that allow the analyst to precisely identify patterns of distributional change and a set of summary measures to characterize such changes. These are based on the relative distribution, defined for our purposes as the ratio of the fraction of households in the baseline year to the fraction of households in the comparison year in each decile of the distribution of income. We use the available high-quality data from the Luxemburg Income Study to explore the evolution of household income inequality in 16 core societies. We describe exactly how inequality grew in some core societies since the late 1960s and discuss the extent to which patterns of distributional change were homogeneous or heterogeneous across the core. We find that: 1) rising inequality is generally associated with polarization, rather than upgrading or downgrading alone; 2) among those societies experiencing the largest increases in inequality, upgrading typically takes precedence over downgrading in the course of such polarization; and 3) declining inequality, where it occurs, has been the result of convergence, with the magnitude of the shift from the lower tail to the middle exceeding that of the shift from upper tail to the middle.

Income Inequality, Global Economy and the State

We investigate interrelationship among income inequality, global economy and the role of the state using an unbalanced panel data set with 311 observations on 60 countries, dated from 1970 to 1994. The analysis proceeds in two stages. First, we test for effects on income inequality of variables characterizing the situation of a society in the world system: world system position (core, semi-periphery, periphery), foreign trade structure, export commodity concentration, export partner concentration and size of the state (measured as government expenditure or revenue). Second, we analyze the role of the interaction between foreign direct investment and government size in the inverted-U shaped relationship of income inequality with foreign investment. We find that most traditional measures of trade dependence have inconsistent or weak positive effects on inequality, while export commodity concentration has a negative effect. We also find that the effects of foreign direct investment on inequality is positive at low to intermediate levels of government size, but that this effect is substantially attenuated or negative in societies with a larger public sector. We conclude that distributional outcomes are dependent upon how the state reacts to growing globalization-related pressures.