Neoliberalism, Finance, and Income Inequality: An Examination of Affluent Capitalist Democracies

In the aftermath of the Great Recession, the dominance of financial markets and their tendency towards crises have resulted in a small global elite capturing huge income increases while many working families have struggled with stagnating wages, job loss, and increasing poverty. At the same time, neoliberal policies, focusing on market deregulation and the decay of social safety nets, have been touted as the way forward despite their potential negative impacts on workers and the poor. In this dissertation, I examine the effects of neoliberalism and financialization on income inequality and distributional dynamics in affluent capitalist democracies in a variety of ways. Using an updated version of the Comparative Welfare States data set, I analyze 18 OECD nations from 1981 to 2011, a period where both neoliberalism and financialization have become the norm. First, I investigate the ways neoliberalism and financialization affect market-generated (pre-tax and pre-transfer) income inequality, redistribution, and state-mediated (post-tax and post-transfer) income inequality. Second, I focus on how these factors determine the top 1% share of total market-generated income because the 1% have experienced the largest financial gains over the last few decades. Third, I incorporate data from the Luxembourg Income Study (LIS) to examine the ways neoliberalism and finance have affected the 90-50 income ratio (comparing the top decile to the median worker), the 50-10 income ratio (comparing the median worker to bottom decile), and the 90-10 income ratio (comparing the top and bottom income deciles). This dissertation contributes to theoretical debates on neoliberalism, financialization, and inequality and provides rigorous empirical testing of current theories. Because the current literature is primarily focused on the United States, this also contributes to the comparative literature on financialization and inequality by focusing more generally on advanced capitalist democracies