The Demographics of Employment and Income Inequality in OECD Countries, 1980-2008

• In Event: 286 - Section on Sociology of Development Roundtable Session (one-hour).
  In Paper Session: Table 03. Inequality

Abstract

Kuznets correctly asserts that income inequality should rise and fall as the labor-force transitions from higher- to lower-paid forms of employment. Problematic with the Kuznets Inverted-U hypothesis, however, is the inability to see the recurrent transfer of labor into newly emergent economic sectors which generates an incessant spiral of income inequality. The current study attempts to formulate a theoretical framework that amends the Kuznetsian view of inequality to account for the recurrent nature of employment transitions. By doing so, it presents the view that the current service–knowledge transition impacts the distribution of national income in a manner that is similar to the previous agricultural–industrial transition. The results of the fixed effects GLS regressions confirm the central arguments of this study for a time-series cross-sectional dataset of 25 OECD countries from 1980 to 2008. According to the findings, classical Kuznetsian variables are either not significant or signed in unanticipated directions in their prediction of income inequality. Instead, this study’s employment transition index is significantly associated with the Gini coefficient net of other theoretically-relevant control variables.

Author

• Roy Kwon, University of La Verne