Doctoral Dissertation Research: The Embedded Economy and National Income Inequality

University Of California-Riverside, Riverside CA

Investigators

Abstract

SES-1333693 Christopher Chase-Dunn Anthony Roberts University of California-Riverside The ubiquitous growth of national income inequality in most areas of the world since the 1980s has challenged established theories of income inequality. Specifically, in the extant literature on income inequality, researchers have identified processes of economic development, globalization, and labor market institutions as the primary factors determining the distribution of national income. However, few studies have considered how these processes are interrelated and whether this interaction explains the recent growth in national income inequality. The main purpose of this dissertation is to empirically test a new integrative theory of income inequality based on the concept of the 'embedded economy' - the interaction of market and social forces. This integrative theory posits that growing income inequality is the consequence of changes to national labor regulations and norms, which are being reshaped by the emergence of global manufacturing and international institutions. The dissertation aims to assess three hypotheses using panel data on eighty developing and developed countries observed over a twenty-five year period (1985-2010) and structural equation models with random and fixed-effects. First, using an internationally-comparable measure of labor market institutionalization based on the coding of national labor legislation and country reports on labor violations, the dissertation will test whether labor market institutionalization reduces income inequality. Second, the dissertation will assess whether integration in global production networks, participation in economic intergovernmental organization, and the campaigning of international non-governmental organizations hinders or promotes the formation of labor market institutions in developing countries while inducing a neoliberal reform of labor market institutions in developed countries. Finally, the dissertation will assess whether these processes indirectly affects income inequality through their effects on labor regulations and norms. The intellectual merit of the dissertation is based on three theoretical and empirical contributions to the broad literature on income equality. First, the dissertation will develop a new theoretical approach for explaining income inequality which accounts for the interaction between labor markets, institutions, and globalization. Second, the dissertation will produce new longitudinal data on labor regulations and practices for a large cross-section of countries. Finally, the dissertation advances the methodological approach to studying cross-national variation in income inequality by employing multi-level structural equation models for estimating both proximate and distal effects. Broader Impact Over the last ten years, income inequality has become a major social issue for governments in developing and developed countries. Findings from the proposed research could have several important implications for policy-making. First, by examining the effects of national labor legislation on income inequality, the dissertation will provide specific evidence on the effectiveness of labor market reforms and social insurance policies for reducing inequality. Second, the findings could elucidate how economic and political globalization have impacted the capabilities of national policy-makers in enacting economic policy aimed creating social equity, which provides insight on how to implement new social policies and reforms in an increasingly global world. Given the growing concern over income inequality, the dissertation will equip policy-makers with helpful information for addressing issues of social inequality.