Lane Kenworthy

Rising Inequality and the Politics of Redistribution in Affluent Countries

We use data from the Luxembourg Income Study to examine household market inequality, redistribution, and the relationship between market inequality and redistribution in affluent OECD countries in the 1980s and 1990s. We observe sizeable increases in market household inequality in most countries. This development appears to have been driven largely, though not exclusively, by changes in employment: in countries with better employment performance, low-earning households benefited relative to high-earning ones; in nations with poor employment performance, low-earning households fared worse. In contrast to widespread rhetoric about the decline of the welfare state, redistribution increased in most countries during this period, as existing social-welfare programs compensated for the rise in market inequality. They did so in proportion to the degree of increase in inequality, producing a very strong positive association between changes in market inequality and changes in redistribution. We discuss the relevance of median-voter theory and power resources theory for understanding differences across countries and changes over time in the extent of compensatory redistribution. Lane Kenworthy is an associate professor in the Department of Sociology at the University of Arizona (lane.kenworthy@arizona.edu). Jonas Pontusson is a professor in the Department of Politics at Princeton University (jpontuss@princeton.edu). Earlier versions of this paper were presented at the Conference of Europeanists (March 2002), a workshop on the Comparative Political Economy of Inequality at Cornell University (April 2002), the annual meeting of the Society for the Advancement of Socio-Economics (June 2002), and a seminar at the Center for European Studies, Harvard University (December 2003). For criticisms and suggestions the authors thank Richard Freeman, Janet Gornick, Alex Hicks, Torben Iversen, Larry Kahn, Tomas Larsson, Jim Mosher, Nirmala Ravishankar, David Rueda, Tim Smeeding, John Stephens, Michael Wallerstein, Christopher Way, Erik Wright, and the Perspectives on Politics reviewers.

Cooperation and political economic performance in affluent democratic capitalism

Research on comparative political economic performance has traditionally followed two separate tracks, one concerned with collective economic gain (growth and efficiency) and the other focused on distribution and redistribution. Cooperative institutions offer a key to understanding cross–national variation among the affluent capitalist democracies in both facets of political economic performance. These institutions cluster along two dimensions: neocorporatism and firm–level cooperation. Pooled time–series analysis for 18 nations over 1960––89 suggests that (1) neocorporatism is a major source of distributive/redistributive policies and outcomes and of several sources of collective gain; (2) firm–level cooperation is a key contributor to economic growth.

Wage-Setting Measures: A Survey and Assessment

Wage setting has been one of the most heavily studied institutions in the field of comparative political economy over the past two decades, and quantitative measures of wage-setting arrangements have played a major role in this research. Yet the proliferation of such measures in recent years presents researchers with a sizable array from which to choose. In addition, some scholars are rather skeptical about the validity and/or reliability of these measures. This article offers a survey and assessment of fifteen wage-setting measures. It attempts to answer questions about (1) how these indicators differ from one another in conceptualization and measurement strategy; (2) which are the most valid and reliable; (3) the strengths and weaknesses of measures of wage centralization versus those of wage coordination; (4) particular countries or time periods for which there are noteworthy discrepancies in scoring; (5) how sensitive empirical findings are to the choice of wage-setting measure.

Jobs with Equality.

Economic and social shifts have led to rising income inequality in the worlds affluent countries. This is worrisome for reasons of fairness and because inequality has adverse effects on other socioeconomic goods. Redistribution can help, but government revenues are threatened by globalization and population aging. A way out of this impasse is for countries to increase their employment rate. Increasing employment enlarges the tax base, allowing tax revenues to rise without an increase in tax rates; it also reduces welfare state costs by decreasing the amount of government benefits going to individuals and households. The question is: Can egalitarian institutions and policies be coupled with employment growth? For two decades conventional wisdom has held that the answer is no. In Jobs with Equality, Lane Kenworthy provides a comprehensive and systematic assessment of the experiences of rich nations since the late 1970s. This book examines the impact on employment of six key policies and institutions: wage levels at the low end of the labor market, employment protection regulations, government benefit generosity, taxes, skills, and women-friendly policies. The analysis includes twenty countries, with a focus on Australia, Canada, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Sweden, the United Kingdom, and the United States. Kenworthy concludes that there is some indication of tradeoffs, but that they tend to be small in magnitude. There is no parsimonious set of policies and institutions that have been the key to good or bad employment performance. Instead, there are multiple paths to employment success. The comparative experience suggests reason for optimism about possibilities for a high-employment, high-equality society.

Quantitative Indicators of Corporatism

Abstract In this article, it is assumed that corporatism consists of various types of institutional arrangements whereby important political-economic decisions are reached via negotiation between, or in consultation with, peak-level representatives of employees and employers (or other interest groups and the state). The article offers an overview of the forty-two prominent or useful indicators of corporatism suggested in the literature. All these indicators are compared, and the correlations among them are examined. The results produced by the various measures in a set of otherwise identical regression analyses of the relationship between corporatism and unemployment show the sensitivity of empirical findings in this field. Students of corporatism have not always paid sufficient attention to the impact of indicator choice on empirical results.

Progress for the poor

One of the principal goals of antipoverty efforts should be to improve the absolute living standards of the least well-off. This book aims to enhance our understanding of how to do that, drawing on the experiences of twenty affluent countries since the 1970s. The book addresses a set of questions at the heart of political economy and public policy: How much does economic growth help the poor? When and why does growth fail to trickle down? How can social policy help? Can a country have a sizeable low-wage sector yet few poor households? Are universal programs better than targeted ones? What role can public services play in antipoverty efforts? What is the best tax mix? Is more social spending better for the poor? If we commit to improvement in the absolute living standards of the least well-off, must we sacrifice other desirable outcomes? Available in OSO:

Americans' Social Policy Preferences in the Era of Rising Inequality

Rising income inequality has been a defining trend of the past generation, yet we know little about its impact on social policy formation. We evaluate two dominant views about public opinion on rising inequality: that Americans do not care much about inequality of outcomes, and that a rise in inequality will lead to an increase in demand for government redistribution. Using time series data on views about income inequality and social policy preferences in the 1980s and 1990s from the General Social Survey, we find little support for these views. Instead, Americans do tend to object to inequality and increasingly believe government should act to redress it, but not via traditional redistributive programs. We examine several alternative possibilities and provide a broad analytical framework for reinterpreting social policy preferences in the era of rising inequality. Our evidence suggests that Americans may be unsure or uninformed about how to address rising inequality and thus swayed by contemporaneous debates. However, we also find that Americans favor expanding education spending in response to their increasing concerns about inequality. This suggests that equal opportunity may be more germane than income redistribution to our understanding of the politics of inequality.

Corporatism and Unemployment in the 1980s and 1990s

A number of studies have found an association between corporatist institutions and low unemployment in the 1970s and/or 1980s. Three gaps in our understanding of corporatisms labor market effects are addressed here: (1) Which of the two principal forms of corporatism-corporatist wage-setting or union participation in economic policymaking, or both-generates these effects? (2) What are the causal mechanisms? (3) Did these effects continue in the 1990s in the face of globalization, restrictive monetary policy, growing dissension within labor movements, and related developments? The impact of corporatism across 16 affluent OECD countries in the 1980s and 1990s is assessed using pooled time-series cross-section analysis. The results suggest that wage coordination was conducive to low unemployment in the 1980s because it fostered moderation in labor costs, spurred faster economic growth, and encouraged governments to more aggressively pursue policies to reduce unemployment. In the 1990s, this effect disappeared, largely because unemployment outcomes in low wage-coordination countries improved rather than because unemployment outcomes in high wage-coordination countries deteriorated. Union participation in economic policymaking was associated with low unemployment throughout the two decades, conditional on the presence of leftist government. Union participation appears to have had this effect mainly via government policy.

Theories and Practices of Neocorporatism

The modern territorial state and the capitalist market economy superseded a political–economic order that consisted of a plethora of corporate communities endowed with traditional rights and obligations, such as churches, estates, cities, and guilds. Organized collectivities of all sorts, more or less closely related to the economic division of labor, regulated cooperation and competition among their members and negotiated their relations with each other. While themselves changing under the impact of modernization, they often resisted the rise of territorial bureaucratic rule and the spread of market relations, sometimes well into the twentieth century. But ultimately they proved unable to prevent the victory of the state form of political organization and of the self-regulating market as the dominant site of economic exchange. Modern liberalism, both political and economic, in turn aimed at abolishing all forms of intermediary organization that intervene between the individual and the state or the market. In the end, however, it failed to eliminate collectivism and had to accommodate itself to both political faction and economic cooperation. Twenty-first-century political communities are all organized by territorial nation-states. But these had to learn to incorporate organized collectivities and elements of a collective–associative order in their different configurations of bureaucratic hierarchy and free markets. Variation among modern types of government, between the utopian extremes of anarchosyndicalism and Rousseauian radical liberalism, rotates around the relationship between territorial and associative rule (Table 22.1).

Civic Engagement, Social Capital, and Economic Cooperation

In Making Democracy Work and a recent article in The American Prospect, Robert Putnam argues that the same factors he believes contribute to a healthy polity—civic engagement and social capital—also foster economic prosperity. They do so, in his view, by encouraging cooperation. The author argues that Putnam is right to emphasize the value of cooperative economic behavior, but that he overstates the contribution of civic activism and social capital to both cooperation and economic success. The principal economically beneficial forms of cooperation tend to be products of institutional incentives rather than social capital. And civic engagement, although helpful in accounting for economic performance differences between Italys north and south, is of little explanatory utility beyond the Italian case.