INCOME INEQUALITY TRENDS IN THE 1980S - A 5-COUNTRY COMPARISON

This paper compares recent developments in income inequality in Canada, Germany, Sweden, the United Kingdom, and the United States. In addition to describing cross-national variation in changes in income inequality, the paper examines different explanatory factors for these recent developments. The findings reported indicate that there is substantial cross-national variation, not only with regard to the level of inequality, but furthermore with regard to changes in inequality. The results indicate that the equalizing effect of welfare state redistribution did not decrease in all countries. By contrast, in all countries there was a universal tendency towards increased inequality in the pre-tax and transfer distribution, although the magnitude of the change differs from country to country. Even though a polarization of the earnings distribution is reported, the results still give no support to cross-national convergence with regard to income inequality during the 1980s.