DO LABOR-MARKET POLICIES AND GROWTH FUNDAMENTALS MATTER FOR INCOME INEQUALITY IN OECD COUNTRIES - SOME EMPIRICAL-EVIDENCE

This paper presents an assessment of the relationship between income d istribution, fundamentals affecting economic growth, and labor market policies. When this relationship is tested, the explanatory power turn s out to be surprisingly high: on average, economic fundamentals expla in about three-fourths of the variation in various inequality measures for the countries of the Organization for Economic Cooperation and De velopment (OECD). Moreover, Granger causality between accumulating eco nomic fundamentals and inequality seems to hold.