Neoliberalism, Finance, and Income Inequality

208 Pages·2017·1.79 MB·English

by  Allen T. Hyde

University of Connecticut
OpenCommons@UConn
Doctoral Dissertations University of Connecticut Graduate School
8-9-2016
Neoliberalism, Finance, and Income Inequality: An
Examination of Affluent Capitalist Democracies
Allen T. Hyde
University of Connecticut - Storrs, [email protected]
Follow this and additional works at:https://opencommons.uconn.edu/dissertations
Recommended Citation
Hyde, Allen T., "Neoliberalism, Finance, and Income Inequality: An Examination of Affluent Capitalist Democracies" (2016).Doctoral
Dissertations. 1175.
https://opencommons.uconn.edu/dissertations/1175
Neoliberalism, Finance, and Income Inequality:
An Examination of Affluent Capitalist Democracies

Allen Thomas Hyde, Ph.D.
University of Connecticut, 2016

ABSTRACT
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
Allen Thomas Hyde– University of Connecticut, [2016]

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.
“Neoliberalism, Finance, and Income Inequality:

An Examination of Affluent Capitalist Democracies”

Allen Thomas Hyde
B.A., University of Alabama at Birmingham, 2009
M.A., University of Connecticut, 2012

A Dissertation
Submitted in Partial Fulfillment of the
Requirements for the Degree of
Doctor of Philosophy
at the
University of Connecticut

2016

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Copyright by

Allen Thomas Hyde

2016

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APPROVAL PAGE

Doctor of Philosophy Dissertation

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

Presented by
Allen Thomas Hyde, B.A., M.A.

Major Advisor __________________________________________________
Michael Wallace

Associate Advisor _______________________________________________
Mary J. Fischer

Associate Advisor _______________________________________________
Jeremy Pais

University of Connecticut
2016

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ACKNOWLEDGEMENTS

As they say with raising children, “It takes a village.” I believe that the same thing
applies to getting a Ph.D. Without the help of my friends, family, mentors, and colleagues, I
would not have achieved this milestone. I would like to begin by thanking my family. They
sacrificed much, even though we had little, in order for me to achieve my dream of becoming a
professor. Countless dollars of our limited income were sent over during my college and
graduate school years, which helped me get through this financially. My mother, Rebecca, has
been an extraordinary influence in my life and probably sacrificed the most to help me succeed.
She stayed at home with me and my brother as a child to supplement our educations by reading
us countless nature books, taking us on hikes in the woods to tell us about the plants and animals,
and walks in creeks to find tadpoles and crawfish. She stimulated my curiosity and nurtured my
interests in learning new things, which is vital for a successful career in academia. My father,
Rickey, worked long hours to financially support our family. He was a role model growing up as
he led my scout troop and coached my soccer teams. And my brother put up with me throughout
life and provided an ear throughout the way. Another special thank you to my Grandmother
Gene and Grandfather Carl for supporting me throughout my academic career.
In graduate school, no one has been more influential than my adviser Michael Wallace.
While we butted heads at times over certain issues, he constantly pushed me to raise my
standards, be more ambitious, and to never give up. He also helped me learn how to be a
professional academic. Beyond that, countless hours were spent writing letters and providing
feedback to my work. Certainly, my success is greatly indebted to his efforts. I would also like to
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thank Jeremy Pais for providing great methods and research feedback and guidance throughout
the graduate school process. Mary Fischer helped me with research projects in urban sociology
that have inspired me to pursue future research in that area. Simon Cheng helped me to refine my
statistical skills and thinking. And Bradley Wright was around to crack jokes; and along with
Mike Wallace, provided my first research experience in graduate school, which was an audit
study on religious discrimination in job hiring. These individuals were certainly very influential
in my graduate career.
In the Department of Sociology, I would like to thank the many graduate students who
supported me along the way. First, Todd Vachon, a coauthor and great friend, has been a huge
asset throughout my graduate school career, and I hope he continues to ruffle feathers with the
union but also gets the great academic job that he deserves. I would also like to thank Heidi,
Angran, Kathleen, and Jordan (most recently) who put up with my moodiness on the bad days
and provided laughs on the good days. Other graduate students, like Trisha (my Half Door
sociology buddy), Taylor, and Chriss, also provided great support and comments on my research
along the way. Finally, I would like to thank my UAB/FYE friends, Carolyn, Derek, Libby,
Braden, Sonja, Rena, John, Matt, and Brian, for many years of support as we have grown from
young 18 year olds to adults. It is good to see that many of us turned out well (for the most part).
UAB professors like Casey Borch, Andre Millard, Mark LaGory, Sarah Parcak, and Erika Austin
also provided inspiration for me to pursue a career in academia. Finally, I should thank all of the
guys and gals that played soccer at the UConn Post Office Fields and the Fieldhouse at the
UConn Rec Center. They helped me take my mind off school and blow off steam from time to
time.
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TABLE OF CONTENTS
Chapter 1: Introduction………………………………………………………………………..…1
1.1 Research Problem…………………………………………………………………....1
1.2 Dissertation Outline……………………………………………………………….....3
Chapter 2: Linking Neoliberalism, Financialization, and Income Inequality…………………..11
2.1 Social Structures of Accumulation, Neoliberalism, and Financialization…………..11
2.2 Neoliberalism, the State, and Income Inequality…………………………………....19
2.3 Financialization and Income Inequality……………………………………………..25
2.4 Conclusion…………………………………………………………………………..55
Chapter 3: Data and Methods……………………………………………………………………57
3.1 Data Sources and Descriptions………………………………………………………57
3.2 Analytical Method
3.3 Descriptive Statistics
Chapter 4: Neoliberal Reform, Financialization, and Income Inequality in 18 Affluent Capitalist
Democracies…………………………………………………………………………………….81
4.1 Introduction…………………………………………………………………………81
4.2 Theory and Hypotheses……………………………………………………………..82
4.3 Instantaneous and Short-Run Effects on Market-Generated Income Inequality,
Redistribution, and State-Mediated Income Inequality…………………………………87
4.4 Long-Run Effects on Market-Generated Income Inequality………………………..89
4.5 Long-Run Effects on Redistribution………………………………………………...95
4.6 Long-Run Effects on State-Mediated Income Inequality…………………………..100
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4.7 Discussion and Conclusions…………………………...…………………………...106
Chapter 5: Free Markets, Finance, and Fat Cats: Neoliberalism, Financialization, and the Top 1%
Share in 18 Affluent Democracies……………………………………………………………...111
5.1 Introduction…………………………………………………………………………111
5.2 Theory and Hypotheses……………………………………………………………..114
5.3 Results………………………………………………………………………………121
5.4 Discussion and Conclusion…………………………………………………………133
Chapter 6: Rising Incomes for the Rich at the Expense of Whom? Neoliberalism,
Financialization, and Upper-Tail, Lower-Tail, and Top-Bottom Income Inequality…….…….138
6.1 Introduction…………………………………………………………………………138
6.2 Theory and Hypotheses……………………………………………………………..146
6.3 Data and Methods Review………………………………………………………….150
6.4 Results………………………………………………………………………………155
6.5 Discussion and Conclusions………………………………………………………..167
Chapter 7: Reflecting on Income Inequality in the Era of Neoliberal Financialization………..174
7.1 Introduction…………………………………………………………………………174
7.2 Summary of Findings……………………………………………………………….176
7.3 Theoretical Implications………………………………………………………...….184
7.4 Limitations and Future Research…………………………………………………...189
References………………………………………………………………………………………193

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