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How Do Neoliberal Policies Affect Income Inequality? Exploring the Link Between Liberalization, Finance, and Inequality
Author(s) -
Kwon Roy
Publication year - 2018
Publication title -
sociological forum
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 61
eISSN - 1573-7861
pISSN - 0884-8971
DOI - 10.1111/socf.12438
Subject(s) - economics , economic inequality , financialization , inequality , liberalization , robustness (evolution) , income inequality metrics , social inequality , income distribution , development economics , finance , market economy , mathematical analysis , biochemistry , chemistry , mathematics , gene
It is commonly asserted that economic liberalization increases income inequality in advanced industrial societies. However, the empirical evidence is inconclusive. The current investigation thus attempts to shed light on this important topic by presenting the argument that economic liberalization indirectly augments income inequality given its tendency to expand financial activity. This contention is tested using a panel dataset of 20 developed economies for the years 1988 to 2009. According to the fixed effects two‐stage least squares models, economic liberalization is positively associated with financialization, while financial activity is positively connected to income inequality. These results are found to be consistent across a variety of regression parameters and robustness checks.