Income Inequality and Workers’ Powerlessness in Selected OECD Countries

Abstract

© 2016, Journal of Economic Issues / Association for Evolutionary Economics. Abstract: Our goal is to show the effects of “elitization” on income inequality in affluent countries over the last two decades. By applying a robust regression model on a sample of twenty-one OECD countries, we observe that a high concentration of wealth by the richest “1%” of the population results in reducing the impact of trade unions on income redistribution through political institutions. Insufficient redistribution can be interpreted not only as the elites’ control over the resources that influence public policy and opinion, but also as affecting the evolutionary path of the economy. Moreover, this influence emphasizes the importance of traditional institutions and serves as an inspiration to reconsider the established social consensus regarding the welfare state.