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those with higher lost wages due to loss of employment. Income assis-
tance programs, on the other hand, often provide benefits based on
a formulaic determination of need rather than wage-earning history
and are thus more redistributive. Still other programs provide a basic
level of provision to all citizens regardless of need or position in the
wage distribution. Differences in the distributive profile of welfare state
programs explain why Social Democratic Party control produces more
general state spending in the form of subsidized goods and services but
is not correlated with the amount of transfer payments through pro-
grams like unemployment insurance, while Christian Democratic Party
control produces greater transfer payments but not general growth in
government (Huber et al. 1993).
Examining multiple measures of welfare state effort and expendi-
tures by category based on their redistributive profile is useful, but
still avoids a test of the true heart of power resources theory  distri-
butional outcomes. Recent work has acknowledged that distributional
outcomes provide the most pivotal evidence regarding power resources
theory, and the advent of the Luxembourg Income Study (LIS) has
provided data for truly comparable cross-national analyses (Bradley
et al. 2003). Still other researchers have resolved the issue of the
importance of outcomes over spending by focusing their attention on
cross-temporal research within a single country, as I will here (Hibbs
and Dennis 1988, Kelly 2005).
Using LIS inequality data, Bradley et al. (2003) provide substan-
tial cross-national evidence in favor of power resources theory. One
important contribution of this work is its analysis of distributional
outcomes in two stages. The first stage is pretax, pre-transfer income
inequality. The second stage is redistribution by the state. Both of these
stages are treated as distinct dependent variables. When testing power
88 The Politics of Income Inequality in the United States
resources theory, explicit examination of distributional outcomes is
clearly superior to analyzing the size or effort of the welfare state. But
the two-stage conceptualization of distributional outcomes also moves
beyond other studies that examine the distributional process in a sin-
gle stage. Wallerstein (1999), for example, uses wage inequality as the
object of explanation, while Hibbs and Dennis (1988) analyze posttax,
post-transfer income inequality. Examining two stages of the distribu-
tional process provides a direct test of the two central predictions of
power resources theory discussed above  that union strength decreases
market inequality and that left party control of government increases
redistribution.
The two-stage analysis by Bradley et al. (2003) shows that labor
union strength influences market outcomes, while left party strength
influences state redistribution. This is entirely in line with the predic-
tions of power resources theory. Labor unions, as the actualization
of lower class power resources in the form of wage-bargaining orga-
nizations, influence the distribution of income prior to government
taxes and transfers. Strong labor unions equalize the distribution of
pretax, pre-transfer income inequality. On the political side of the
coin, left party governments enact qualitatively different welfare states
than parties of the right  strong left parties produce more government
redistribution.2
Since posttax, post-transfer inequality is likely the most impor-
tant single outcome of interest given that it is the final distribution
of economic resources, it is important to note that the final prod-
uct of the analysis of this two-stage conceptualization of inequality
is examination of the final distribution of income. Posttax, post-
transfer inequality is the final outcome of the two stages of the
distributional process. Pretax, pre-transfer inequality plus redistribu-
tion generated by taxes and transfers produces posttax, post-transfer
inequality. The value added of the two-stage conceptualization of dis-
tributional outcomes is that it provides additional theoretical leverage
2
In the cross national context in which Bradley et al. (2003) are working, the religious
nature of political parties also matters. They find that strong Christian parties produce
less redistribution than non-Christian parties, regardless of their ideological stripe.
This is an important finding, but one that is not particularly relevant for my analysis
of the two U.S. parties.
Party Dynamics and Income Inequality 89
by allowing separate analyses of market and state influence on dis-
tributional outcomes. This is particularly useful given that power
resources theory explicitly identifies market power resources and polit-
ical power resources as two pathways through which the lower classes
can influence the distributional process.
Applying and Extending the Theory: Inequality in the
United States
My goals in this chapter are to test the traditional predictions of power
resources theory in the context of the post World War II United States
and to examine some still unverified implications of power resources
theory. The two most fundamental hypotheses of power resources
theory relate to the impact of market and political power resources
on distributional outcomes. The primary impact of market power
resources is expected to be in the market. Specifically, labor union
strength should produce lower levels of market inequality. Political
power resources, on the other hand, primarily influence state action.
Thus, the prediction for political power resources is that left party
strength will increase government redistribution. This latter hypothesis
could be called the classic redistribution hypothesis of power resources
theory, and it has been tested time and again in the cross-national
literature.
I also develop an additional hypothesis of power resources theory
that has failed to receive much attention, let alone support, in previous
studies of welfare state expenditures and income inequality. I hypoth-
esize a link between political power resources and market outcomes
 an impact of political power resources on distributional outcomes [ Pobierz całość w formacie PDF ]