The Goldilocks Effect: Explaining Convergence in National Income Distributions, 1960-2013

• In Event: 119 - Section on Global and Transnational Sociology Paper Session. Explaining Socio-Political Convergence? Evidence from Large-N Cross-National Comparisons

Abstract

Recent work shows that national income distributions are converging, with stratified nations becoming more equal and egalitarian countries becoming more unequal. In this study, I draw from existing theory to develop and test several explanations for the convergence trend. I then introduce a more novel argument that attributes convergence to a “Goldilocks effect,” which refers to a statistical bias against extreme levels of (in)equality. I first demonstrate the tendency for income distributions to become more moderate over time using simulation data. I then apply these principles to inequality data covering a maximum of 4,539 observations across 170 countries between 1960 and 2013 from the Standardized World Income Inequality Database (SWIID). I find that a country’s initial Gini score is negatively related to subsequent change in the Gini (i.e., β-convergence), with egalitarian and stratified countries both drifting towards a moderate level of inequality. Moreover, the point of convergence is remarkably similar to the one identified in the simulation data. Finally, I show that β-convergence persists net of other factors that potentially draw inequality levels closer together (sectoral shifts, political reforms, and globalization), and I replicate these results using inequality data from the Luxembourg Income Study (LIS). Overall, the findings suggest that inequality scholars should devote greater attention to convergence, in general, and the Goldilocks effect, in particular.

Author

• Rob Clark, University of Oklahoma