Why is Income Inequality Increasing in the Developed World?

Roser, M. & Crespo Cuaresma, Jesus (2016). Why is Income Inequality Increasing in the Developed World? Review of Income and Wealth 62 (1) 1-27. 10.1111/roiw.12153.

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Abstract

We address empirically the factors affecting the dynamics of income inequality among industrialized economies. Using a panel for 32 developed countries spanning the last four decades, our results indicate that the predictions of the Stolper-Samuelson theorem concerning the effects of international trade on income inequality find support in the data if we concentrate on imports from developing countries as a trade measure, as theory would imply. We find that democratization, the interaction of technology and education, and changes in the relative power of labor unions affect inequality dynamics robustly.

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