The goldilocks effect3/13/2023 ![]() And rising income disparities are accompanying the growth miracles in Asia, including China and India (Atkinson and Piketty, 2010 Wang, 2008). Transition economies in Eastern Europe have also seen a dramatic increase in income inequality since the early 1990s (Bandelj and Mahutga, 2010 Mahutga and Bandelj, 2008). High-income nations in the West are experiencing an inequality uptick, now commonly referred to as the “Great U-Turn” (Alderson and Nielsen, 2002 Harrison and Bluestone, 1988). Rising inequality affects a large number of countries across the world. Overall, the findings suggest that scholars should begin to account for convergence dynamics when modeling income distributions within nations. By contrast, β-convergence is not explained by sectoral transitions, nor do development or globalization appear to accelerate the process, casting doubt on alternative interpretations. Overall, the results are most consistent with the latter two accounts, indicating a public aversion to, and statistical bias against, extreme levels of (in)equality. I then test several theoretical explanations for this trend, including (1) sectoral transitions, (2) economic development, (3) global diffusion, (4) public sentiment, and (5) statistical bias. ![]() ![]() I find that a country's initial Gini is negatively related to subsequent change in the Gini (i.e., β-convergence), with egalitarian and stratified countries both drifting towards a more moderate level of inequality. I replicate this finding using more recent data from multiple sources, drawing from 3006 observations across 152 countries from the Standardized World Income Inequality Database (SWIID) and 238 observations across 46 countries from the Luxembourg Income Study (LIS) during the 1990–2015 period. Recent work shows that national income distributions are converging, with stratified nations becoming more equal and egalitarian countries becoming more unequal.
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