Colloquium Series: John D. Stephens, UNC Chapel Hill – Political Science

Politics, Markets, and Top Income Shares

The rise of the super-rich has attracted much political and academic attention in recent years. However, to
date there have been few attempts to explain the cross-national variation in the recent rise of very top
incomes. Drawing on the World Top Incomes Database, we study the income share of the top 1% in almost
all current postindustrial democracies from 1960 to 2012. We find that extreme income concentration at the
very top is a predominantly political phenomenon, not the outcome of economic changes. Top income
shares are largely unrelated to economic growth, increased knowledge-intensive production, export
competitiveness, market size, financialization, and wealth accumulation. Instead, they are driven by
various political and policy changes that reflect a decline in the relative power and resources of labor, such
as union density and centralization, secular-right governments, and cuts in top marginal income tax rates.