Contents

19.1. Introduction 1730

19.2. The Research Question and Methods to Explain Inequality and its Change 1732

19.2.1 TheStructureoftheResearchQuestion 1732

19.2.2 Notes on the Arguments and Parts of the Grand Inequality Regression Equation (GIRE) 1735

19.2.2.1 TheusefulnessoftheGeneralFormulation 1735

19.2.2.2 The Units of Analysis 1736

19.2.2.3 Regression Methodology 1736

19.3.

19.3.1 DifferentStrategiesforMulticountryStudies 1739

19.3.2 Data Sources: The Fast Development of Data Availability

in the Last Decades 1740

19.3.2.1 Standardized Microdata 1740

19.3.2.2 Secondary Datasets 1743

19.3.2.3 SecondarySyntheticDataCompilations 1748

19.3.3 Concluding Remarks 1749

19.4. Definition of Inequality Measures and Their Variability 1750

19.4.1 DefinitionoftheDependentVariable 1750

19.4.2 Variability of the Dependent Variable 1751

19.4.3 Reliability of the Dependent Variable 1752

19.5. Drivers of Inequality: Main Explanations 1755

19.5.1 StructuralMacroeconomicSectoralChanges 1756

19.5.2 GlobalizationandTechnicalChange 1758

19.5.2.1 Trade 1759

19.5.2.2 Trade Openness and Inequality in an Enlarged Country Sample 1762

19.5.2.3 Financial Openness 1763

19.5.2.4 Outsourcing 1766

19.5.2.5 Technological Change 1768

19.5.2.6 Trade-Induced Technological Change or Technology-Induced Trade? 1770

19.5.2.7 Education 1771

19.5.2.8 Going Beyond the Economic Notion of Globalization 1773

Handbook of Income Distribution, Volume 2B

© 2015 Elsevier B.V.

All rights reserved. 1729

ISSN 1574-0056, http://dx.doi.org/10.1016/B978-0-444-59429-7.00020-0

19.5.3 ChangesinlnstitutionsandRegulations 1774

19.5.3.1 WageDispersionEffects 1776

19.5.3.2 Income Inequality Effects 1777

19.5.4 Political Processes 1778

19.5.4.1 Preference Formation and Partisanship 1779

19.5.4.2 The Issues at Stake: Different Forms of Redistribution 1783

19.5.4.3 Political Inequality: Unequal Participation in Elections 1784

19.5.4.4 Political Regimes and Partisanship 1786

19.5.5 Redistribution Via Taxes and Transfers: Technical and Efficiency Aspects 1788

19.5.5.1 Overall, First-Order Effects of Redistribution 1790

19.5.5.2 Back to Politics: The Paradox of Redistribution 1793

19.5.5.3 Second-Order Effects of Redistribution: Labor Market Responses 1794

19.5.6 StructuralSocietalChanges 1795

19.6. Conclusions: Major Findings from the Literature Survey and Implications for Further Research 1799

19.6.1 A Summary of Findings and Propositions from the Overview of Studies Providing

Multicausal Explanations 1799

19.6.2 LessonsonMethodsandModels 1806

Acknowledgments 1831

References 1831