Chapter 19. Cross-Country Evidence of the Multiple Causes of Inequality Changes in the OECD Area

This chapter provides a thorough survey of what recent international (i.e., cross-country) studies can tell us about the multiple causes of income inequality in the OECD area with regard to both levels and trends. The survey covers economics literature in particular but also relevant evidence from sociology and political science. We provide an overview of drivers of inequality in six areas: (i) structural macroeconomic sectoral changes, (ii) globalization and technology change, (iii) labor market and other relevant institutions, (iv) politics and political processes, (v) tax/transfer schemes, and (vi) demographic and other microstructural changes. We find that the literature, while extremely rich in partial analysis of all six areas, provides very few analyses with truly multivariate and multicountry specifications for the joint section of the OECD and EU countries. Suggestions include more cross-discipline reflections on various findings. This is now well facilitated by the spectacular development of data, as well as in relation to methodological harmonization across disciplines.