Previous scholarship suggests that rising inequality in democracies suppresses trust in institutions. However, the mechanism behind this has not clearly been identified. This paper investigates the proposition that income inequality leads to increased democratic distrust by depressing perceptions of external efficacy. Based on time‐series cross‐sectional survey data from the European Social Survey, we find that changes in income inequality have a negative effect on changes in political trust and external efficacy. Causal mediation analysis confirms that inequality affects trust through lower efficacy. Further analyses show that this efficacy‐based mechanism does not depend on political orientation. As a direct effect remains among left‐wing respondents, our empirical results indicate that inequality affects trust via both a mechanism of substantive output evaluation and a process‐based evaluation that measures of external efficacy can capture. These findings highlight the empirical and theoretical relevance of this so far neglected mechanism and provide a potential solution for the puzzle that inequality depresses trust also among those for whom inequality is not politically salient.

Stagnating incomes have been a widespread concern in advanced democracies over the past decades. However, despite a turn towards dynamic frameworks, the consequences of stagnation on political support for the welfare state are still unclear. This study introduces the distinction between ‘absolute’ and ‘relative’ income stagnation – that is, experiencing stagnating incomes over time (without reference to other groups) and in relative comparison to other groups – and explores how they shape citizens’ attitudes towards redistribution. I argue that absolute and relative stagnation have opposite effects on redistributive preferences. Contrary to political economy theories, I expect that low absolute income growth reduces demand for redistribution, because it reduces voters’ ability and willingness to afford welfare state policies. Support for this hypothesis is provided in an empirical analysis that combines novel estimates for absolute and relative income stagnation with longitudinal survey data on redistribution preferences in 14 advanced democracies between 1985 and 2018. The distinction between absolute and relative experiences has broader implications for comparative politics research and might contribute to explain why income stagnation and rising inequality have not led to higher political demand for redistributive welfare policy.

This article examines support for radical left ideologies in 32 European countries. It thus extends the relatively scant empirical research available in this field. The hypotheses tested are derived mainly from group‐interest theory. Data are deployed from the 2002–2010 European Social Surveys (N = 174,868), supplemented by characteristics at the country level. The results show that, also in the new millennium, unemployed people and those with a lower income are more likely to support a radical left ideology. This is only partly explained by their stronger opinion that governments should take measures to reduce income differences. In contrast to expectations, the findings show that greater income inequality within a country is associated with reduced likelihood of an individual supporting a radical left ideology. Furthermore, cross‐national differences in the likelihood of supporting the radical left are strongly associated with whether a country has a legacy of an authoritarian regime.

This study analyses why income inequality and party polarisation proceed together in some countries but not in others. By focusing on the relationship between income inequality, the permissiveness of electoral systems and party polarisation, the study offers a theoretical explanation for how the combination of income inequality and permissive electoral systems generates higher party polarisation. After analysing a cross‐national dataset of party polarisation, income inequality and electoral institutions covering 24 advanced democracies between 1960 and 2011, it is found that a simple correlation between income inequality and party polarisation is not strong. However, the empirical results indicate that greater income inequality under permissive electoral systems contributes to growing party polarisation, which suggests that parties only have diverging ideological platforms due to greater income inequality when electoral systems encourage their moves towards the extreme; parties do not diverge when electoral systems discourage their moves towards the extreme.

This study provides a novel contribution to the democracy–inequality literature by presenting the belief in democratic redistribution (the view that redistribution is an essential characteristic of democracy) as a conditioning factor. Democracy is expected to reduce inequality when people perceive redistribution as an essential characteristic of it, yet initial analysis shows contrasting results depending on the operationalisation of the indicator. Subsequent findings show, perhaps surprisingly, that democracy is only correlated with lower inequality when more people regard elections and liberties, instead of redistribution, as the essential characteristics of democracy. Democracy is associated with higher inequality when a larger share of the population considers redistribution to be essential to it. It is suggested that in response to the utilitarian view of democracy, authoritarian leaders can gain legitimacy by reducing inequality, whereas elected leaders in a democracy can hold power with little action on redistribution.

Wilkinson and Pickett, in their 2009 book The Spirit Level, found that, in rich countries, income inequality was negatively associated with a range of indicators of well-being, but they did not consider the relationship with volunteering. This paper seeks to fill that gap. Using existing data sources, it shows that, among European countries, higher levels of volunteering are associated with lower levels of income inequality. The relationship is particularly strong for regular and sport-related volunteering. The basic Spirit Level thesis is therefore confirmed as applicable to volunteering. However, while the thesis involves just one theoretical explanation for the income inequality/well-being relationship, namely status anxiety, in the case of volunteering, other variables are also found to be at play, including government social spending, available leisure time and geo-historical traditions. It is concluded that, while high levels of volunteering, as a form of social capital, can be seen as one of a number of features of more equal societies, disentangling cause and effect may require a more holistic approach to understanding its contribution to the generation and sustaining of social well-being.

Unlike existing studies on labour and income in the digital era, this paper argues not only that the impact of the digital economy’s intervention in the labour process is fragmented rather than comprehensive, but also that the transformation of job demand and labour supply behaviours is simultaneous and related to the attributes of the industries in which they operate. Drawing on the conventional biased technological progress hypothesis and labour process theory, we argue that the digital economy has generally increased the labour income inequality for migrant workers in China. Using geospatially matched China Labour Dynamics Survey 2018 microdata and provincial digitalisation indices, we uncover a digital ‘upgrading trap’: the development of the digital economy hides the process of inequality formation in the hedging relationship between objective labour demand ‘upgrading’ and subjective labour supply ‘expanding’. The former can be summarised as the risk of ‘no job’ and the latter as the risk of ‘no way back’. Counterintuitively, consumer Internet development demonstrates a greater role in both reducing workers’ inequality in secondary labour markets and promoting a fair primary distribution. These findings reconceptualise digital inequality as coevolutionary outcomes, and offer a tripartite governance way for inclusive growth through portable skill certification, algorithmic accountability mechanisms, and interoperable social security systems.

Legitimizing property rights over the resources that participants use in dictator and ultimatum games has been shown to significantly alter behavior. However, a similar impact has not been observed in public good experiments. We employ an interior public good design with thirty periods of peer punishment, which allows groups to choose between plausible contribution norms without conflicting with efficiency. Across our Unearned and Earned treatments, endowments are randomly allocated or earned through a real effort task. In Unearned, both High and Low types adhere to a norm of contributing an equal proportion of one’s endowment. In contrast, in Earned, only Low types adhere to the proportional contribution norm, while High types contribute less than an equal proportion. Notably, deviations from the proportional contribution by High types are punished significantly less in Earned, suggesting a greater tolerance to such deviations when property rights are earned.

We introduce a banking sector and heterogeneous agents in the dynamic overlapping generations model of Matsuyama et al. (2016). Our model captures the benefits and costs of an advanced banking system. While it allocates resources to productive activities, it can also hinder progress if it invests in projects that do not contribute to capital formation, and potentially triggering instabilities due to the emergence of cycles. Our intergenerational dynamic framework enables us to show that income inequality between agents increases during recessions, confirming empirical observations. Moreover, we identify both changes in production factor prices and the reallocation of agents across occupations as driving factors behind the increased inequality.

Comparative research documents substantial education- and income-based class gaps in parent spending on children’s education, with important repercussions for the perpetuation of intergenerational (dis)advantage. Spurred by higher levels of income inequality and associated economic transformations, some speculate these gaps may have widened, as parents feel intensified pressure to best position their children in increasingly competitive labour markets. We examine the size and evolution—over time and in response to higher inequality—of these class gaps in the Canadian provinces, a context where we propose competitive pressures may be muted by the country’s relatively unstratified post-secondary education system. Exploiting provincial and temporal variation in Statistics Canada’s Survey of Household Spending (2006–2019), we show that more highly educated parents, and to a lesser extent high-income ones, place distinct emphasis on education spending. However, we find limited evidence of changes in these spending patterns in response to income inequality or over time.

Governments shape policy outcomes using two distinct mechanisms: rules and discretion. A simple decomposition strategy is proposed for distinguishing between these policymaking mechanisms on income inequality in the American states from 1986 to 2020. This analytical strategy is easily applicable to other policy settings. The statistical evidence, for the most part, that income inequality observed in the American states is generally unaffected by both TELs and partisan control of state governments—the lone exception being unified Republican state governments operating under a TEL. The decomposition evidence, however, shows that this is primarily the result of discretionary policymaking differences among partisan governments. This study underscores the importance of disentangling policy mechanisms that jointly occur when evaluating the consequences of government policymaking authority.

The study is based on data from Chinese listed companies and explores the impact of a company’s position in the global value chain (GVC) on internal wage distribution and income inequality. The results show that although the improvement of GVC status in enterprises has increased the average salary level of all employees, it has exacerbated the wage gap between management and grassroots employees, leading to widening income inequality, mainly achieved through rent-sharing mechanisms. In addition, companies with higher human capital can alleviate the income inequality effect caused by the rise of GVC status. Further analysis reveals that the impact of GVC status on internal income inequality in enterprises is heterogeneous regarding property rights, employee bargaining power, and enterprise size. The study provides a new perspective on exploring the income distribution effects of the GVC from a micro perspective, emphasising that enterprises need to pay attention to building a fair and reasonable income distribution structure while being open to others at a high level. It is significant for promoting the construction of micro-mechanisms based on enterprises, fostering social equity and inclusive growth.

We examine how taxes impact charitable giving and how this relationship is affected by the degree of wasteful government spending. In our model, individuals make donations to charities knowing that the government collects a flat-rate tax on income (net of charitable donations) and redistributes part of the tax revenue. The rest of the tax revenue is wasted. The model predicts that a higher tax rate increases charitable donations. Surprisingly, the model shows that a higher degree of waste decreases donations (when the elasticity of marginal utility with respect to consumption is high enough). We test the model’s predictions using a laboratory experiment with actual donations to charities and find that the tax rate has an insignificant effect on giving. The degree of waste, however, has a large, negative and highly significant effect on giving.

At a time when the prospects confronting Hong Kong are overshadowed by the combination of the popular movement for democratic rights and the corona virus epidemic that is challenging Hong Kong as well as China, issues of income inequality and declining economic prospects deeply affect the future of Hong Kong youth. This article documents the pattern of growing income inequality with specific reference to educated youth of Generation Y in spheres such as income distribution, the relative stagnation of income of young graduates, and soaring housing prices that make Hong Kong among the most expensive real estate markets in the world.

This paper, building on new archival research and the social table method, presents comprehensive estimates of income inequality in Mexico in 1895, 1910, 1930 and 1940. Inequality grew from 1895 to 1910, driven by economic expansion within the context of an oligarchic economy. While real income increased for the lower classes during this period, the main beneficiaries were large landowners and entrepreneurs. In the revolutionary period from 1910 to 1930 inequality decreased especially as a result of land reforms, benefitting peasants at the expense of the large landowners. However, the economic structure of the country was not fundamentally changed, and in the 1930s inequality raised as incomes of peasants and those in the informal sector fell behind manufacturing and other high-earning sectors. The Mexican case shows the complex interaction of economics, demography and politics in determining economic inequality.

Rectifying the imbalance of theorisation of education expansion focusing on its benefits, this study examines the relationship between education expansion and income inequality by turning our attention to its risky aspects. We investigate how expanding education might not effectively mitigate income inequality, because it brings about costly and risky competition for the positional value of education. We consider welfare regimes as relevant institutional factors associated with educational positionality based on the similarities between two environmental conditions that make education positional and two underlying dimensions of welfare regimes (de-stratification and commodification). We analysed higher education cases in twenty-four to twenty-five developed countries from 2000 to 2020. Our results show that higher education expansion initially reduced income inequality, but the reducing effect was attenuated, and eventually, it increased income inequality when higher education was positional, corresponding to the countries with a liberal regime and two East Asian countries such as Japan and Korea.