Doctoral Dissertation Research: Income Distribution and Redistribution in Rich Countries Under Finance-led Capital Accumulation

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SES-1637129Ho-fung HungDaniel ThompsonJohns Hopkins University Inequality has increased in the United States and other rich countries over the last four decades. Scholars seeking to explain these trends have given much attention to deindustrialization and globalization, but a related trend, financial sector growth, is understudied. Finance is the largest source of corporate profits in most rich countries, but the sector employs few and has high earnings dispersion. Looking beyond the financial sector itself, social scientists have argued that financial sector influence has led to rising inequality within non-financial firms and declining redistribution in welfare states. To understand the relationship between finance and inequality, this dissertation will examine across 18 countries and over 40 years the effects of financial sector growth on five distributional outcomes: wage inequality, unemployment, tax progressivity, income transfers, and net inequality. This dissertation will contribute to academic scholarship on comparative inequality and comparative politics, in which few works have examined financial sector growth. It will also contribute to public debate on the causes of rising inequality as well as public policy on issues related to inequality and redistribution. The project will investigate the association between financial sector growth and inequality as well as the mechanisms through which this relationship takes place. Theoretically, the project draws on macro-comparative political economy, power resource theory, and institutional analysis, and it potentially will offer contributions to each theoretical perspective. It combines two methodological approaches. First, a statistical analysis will examine distributional outcomes in 18 countries over a period of 40 years. These will be used to identify general patterns and associations and frame the relationships for closer study. Second, qualitative, historical case studies of the United States, Germany, and Sweden will examine more closely the causal processes and intervening variables that link financial sector growth and rising inequality, while accounting for these countries' variation in institutional context. This more detailed causal analysis can improve understanding of the statistical associations identified in the quantitative analysis.