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that Left government is associated with high minimum wages, government consumption and
taxes on labor when corporatism is low. Also as expected, the influence of partisanship on
taxes on corporations is statistically insignificant even when corporatism is low. It seems
that capital-exit threats are indeed powerful enough to stop Left governments from taxing
corporations.
Still when corporatism is low but now turning to the relationship between policy and
inequality, this paper’s expectations were simple. In Figure 1, I hypothesized that all policies
would have significant and negative effects on inequality. Figure 4 presents strong support
for these hypotheses. As expected the absence of corporatism makes policies very effective
at reducing inequality. Increases in the minimum wage, government consumption and taxes
on corporations are significantly related to decreases in inequality at the lower half of the
wage distribution. The only exception is the influence of taxes on labor (which is
insignificant). There are reasons to suspect, however, that this finding is influenced by the
nature of the dependent variable. As was mentioned in a previous section, the measure of
inequality used in this paper refers to gross income and therefore does not account for the
influence of labor income taxes. This may be the reason for the lack of significance found in
Figure 4.
The results for the partisanship and policy variables when corporatism is high are also
presented in Figure 4. Again going back to Figure 1, the expectations for these relationships
were straightforward. When corporatism is high, it was hypothesized, the actions of the
social partners in the labor market “take care” of wage compression. This leaves little room
for policy to affect inequality. Policy-makers understand this process and therefore promote
policy without significant partisan effects. Statistical insignificance was therefore expected
in all relationships. Turning to Figure 4 it seems clear that this is indeed the case when
corporatism is high. The results provide a remarkable amount of support to the hypotheses.
All relationships are insignificant. Neither the influence of policy on inequality nor that of
partisanship on policy are of importance. The only exception is the effect of government
Convention