Power and inequality: determinants of income inequality in rich capitalist democracies, 1960 to 2019

Abstract We explore the link between the distribution of power and income inequality in rich capitalist democracies since 1960. We advance understanding of the impact of government ideology, a key indicator of the distribution of power, in two ways. First, previous research has tended to focus on government ideology at the country level. We make use of party manifesto data to introduce a novel global ideology measure that captures a global shift rightward since 1980, often referred to as the rise of neoliberalism. Second, for country-level party ideology, we use party manifesto data to capture changes over time. We find that this time-varying operationalization of party ideology is more strongly linked to income inequality than the standard expert-survey operationalization that assumes party ideology remains constant. In line with theoretical expectations derived from prior research, our findings show that a more rightward distribution of power at both the country and the global level is associated with increased income inequality within countries.