Left Government, Policy, and Corporatism: Explaining the Influence of Partisanship on Inequality

Abstract

The author argues that to understand the relationship between partisan government and equality two fundamental things need to be done: separate the effects of partisanship on policy and of policy on the economy; and assess the influence of government partisanship once the mediating role of corporatism is accounted for. The main goal of this article is to explore the relationship between government partisanship, policy, and inequality at the lower half of the wage distribution. The analysis is motivated by a puzzling finding in previous work: the absence of government partisanship effects on earnings inequality. The author focuses on the role of three different policies: government employment, the generosity of the welfare state, and minimum wages. The results show that government employment is a most significant determinant of inequality (although it is affected by left government only when corporatism is low). They also demonstrate that welfare state generosity does not affect inequality and, in turn, is not associated with left government. Finally, they reveal that the effect of government partisanship on minimum wages and of minimum wages on inequality is completely conditional on the levels of corporatism (these effects are only present when corporatism is low). The author explains why specific policies do or do not affect earnings inequality and also why corporatism mitigates or magnifies the influence of government partisanship. By explicitly exploring the determinants of policy and earnings inequality, the article represents an important contribution to our understanding of how governments can promote redistribution.

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