Political justice versus market justice: Explaining variation in income inequality among consensus and majoritarian democracies

Income distribution is a complex phenomenon that is shaped by an array of macroeconomic factors, political institutions, and sociocultural norms. Although income inequality is growing in most capitalist democracies, there is substantial variation in the degree of inequality. This dissertation offers an explanation of such variation among a set of sixteen OECD countries. I argue that income inequality cannot be analyzed strictly as a policy outcome but should be understood within a broader explanatory framework. The strategy I pursue adds theoretical depth and a cultural dimension to an institutional analysis. Using Arend Lijphart's typology of consensus and majoritarian democracies, I hypothesize that these two distinct approaches to democratic governance will help to predict differences in income inequality among this group of countries. However, I submit that it is not only institutions that matter, but also the individuals situated in these institutional environments with preferences and attitudes that, when aggregated, amount to broad sociocultural values and norms about distributive justice and the proper roles of states and markets. Given the most basic principles of democratic theory, this type of cultural dimension should play a prominent role in our causal story about such societal outcomes as income distribution.; I construct a multiple regression model that includes an interactive term for culture (operationalized through survey data) and political institutions (Lijphart's empirical indicators). The data are then employed in a pooled time series/cross-sectional panel design (N = 16, t = 2) with control variables for various macroeconomic conditions and other political factors. I supplement the statistical analysis with a critical case study of Switzerland.; Employing such methods allows the relative weight of institutional and cultural factors to be brought into focus, drawing out the nuances of my thesis. Institutions do not exist in a cultural vacuum, but rather are moored to an underlying value system that shapes the possibilities and limitations of politics and markets. The results of this study provide preliminary evidence that variations in income inequality can be most fully explained by seeing this outcome as a confluence of institutional and cultural factors. Perhaps most importantly, the study demonstrates that the concerns of political economy and democratic theory are parallel and both must bear on our understanding of the impact of institutions on ding of the impact of institutions on income inequality. Integrating cultural variables not only theoretically enriches our institutional analyses but may add considerable empirical weight as well.