I Inequality and Redistribution

Determinants of Inequality in Latin America and Eastern Europe: Economic Structure and Domestic Policy Choices (book manuscript)

My book manuscript explores the factors that affect market income inequality in two regions that pursued substantial economic reorganization and integrated into the global economy in a period of intensifying globalization. Combining time-series cross-sectional statistical analysis and extensive fieldwork in Bulgaria, Chile, and Peru, I argue that the different patterns of economic restructuring and specialization in these regions have shaped their income distribution in different ways. Contrary to existing theoretical approaches, which often ignore economic dynamics, I focus on previously neglected structural transformations related to deindustrialization, agricultural modernization, and specialization in the production of commodities. I complement the statistical analysis of these trends with 145 expert interviews with academics, politicians, and policy advisors which explain why governments from different ideological stripes have largely adhered to the neoliberal model in labor market and economic policy. Taking a comprehensive view, bridging several literatures, and focusing on a previously neglected outcome, the book illuminates important dynamics that shed light on the constraints that policymakers face in an increasingly interconnected world.

Redistribution and the Quality of Government: Evidence from Central and Eastern Europe (article)

The welfare state literature has largely ignored the impact of a country’s quality of government on its levels of redistribution. Using cross-sectional time-series analysis of twenty one Central and Eastern European countries, I show that environments characterized by higher levels of corruption, rampant bureaucratic inefficiency, and ineffective enforcement of the rule of law are associated with lower levels of redistribution. Poor government directly affects the supply side of the redistribution process by hindering countries’ ability to allocate funds to redistribution and deliver them to their beneficiaries. Contrary to existing demand-oriented perspectives, the proposed causal mechanism does not blame lower redistribution on the lack of public support for the welfare state. Rather, it focuses on the capacity of states to adopt and implement inequality-reducing policies. The results are robust to numerous extensions and model specifications.

Globalization, Political Institutions, and Redistribution in Central and Eastern Europe (with Aleksandra Sznajder Lee) (article)

We examine the role of political institutions in mediating the effects of globalization on economic redistribution in Central and Eastern Europe. The region represents a least-likely case of welfare state resilience in the face of global economic pressures given its reliance on foreign capital and considerable domestic elite support for neoliberal recipes during the postcommunist transition. Yet, contrary to the race-to-the-bottom hypothesis and consistent with the compensation perspective, we find that economic openness is on average related to higher redistribution. Using the high-quality European Union Statistics on Income and Living Conditions database for 2004–2018, we find that this effect is particularly pronounced in institutional environments where votes are more accurately translated into legislative seats (low disproportionality) and where governments face greater scrutiny both during elections (vertical accountability) and between them (diagonal accountability). Thus, even in a region that adopted “competitive deregulation,” the downward pressures of globalization were limited by electoral pressures for economic redistribution.

II Financialization

The Global Deregulation Hypothesis (with Thomas Oatley) (article)

The growth of the American financial services remains a bit of a puzzle. The standard approach, the deregulation hypothesis, posits that the industry expanded in response to national deregulation. Yet, when viewed in a comparative context, US finance was deregulated significantly less than other national financial systems and yet grew significantly more than most. We propose the global deregulation hypothesis as a solution to this puzzle. The hypothesis posits that American finance grew in response to deregulation in Europe and the emerging market economies. The article develops two theoretical mechanisms that link global deregulation to US financialization. It reports statistical tests that support two central implications of the global deregulation hypothesis. First, global deregulation is positively associated with the growth of US financial services, while US deregulation is not. Second, global deregulation is not systematically related to the growth of financial services in other industrial democracies.

Financialization, Labor Market Institutions, and Inequality (with Evelyne Huber and John D. Stephens) (article)

The last three decades have witnessed rising inequality and deepening financialization in post-industrial democracies. A rapidly growing literature has linked these two phenomena. We go beyond existing scholarship by specifying which aspects of financialization can be expected to increase inequality and where in the income distribution this effect will occur. We also show that this effect is contingent on institutional context. We posit that the shareholder model of corporate governance and the growing demand for financial professionals are the two dimensions of financialization that drive up pre-tax income inequality. Nevertheless, the spread of the shareholder value model only benefits the very top income earners. We further argue that the institutional strength of labor shapes the relationship between financialization and inequality. We analyze effects of indicators of these two dimensions of financialization on the top 1% and the next 9% income shares and on the 90:50 earnings ratio. We test our hypotheses with data on 18 post-industrial democracies between 1960 and 2015.

III Democratic Support

Authoritarian or Simply Disillusioned? Explaining Democratic Skepticism in Central and Eastern Europe (with Kiran Auerbach) (article)

Survey research has revealed that post-communist citizens are skeptical towards democracy. Despite a substantial body of literature that has researched the origins and determinants of these attitudes, consensus has not yet emerged. A major challenge has been to distinguish between individual support for democracy as an ideal political regime and satisfaction with the way democracy is practiced in one’s country. Using structural equation modeling with latent variables, we improve measurement validity and account for feedback effects to better understand the relationship between these attitudes. Consistent with our performance-based theory, we find that positive assessments of political performance drive normative support for democracy. The impact of satisfaction with democracy on democratic support suggests that we should not rush to view post-communist citizens’ mindset as anomalous and inherently anti-democratic. Rather, post-communist skepticism of democracy might be generalized to contexts characterized by flawed implementation and unmet expectations of this form of government.