The political economy of income inequality: Exploring the impact of associational and organizational rights

The literature on income inequality, which has traditionally focused on economic factors, broadened over the past few years to include political phenomena. The inadequacy of economic factors alone in explaining inequalities has led researchers to examine political drivers. This emerging research line highlights prominent political factors and can significantly enhance academic and political understanding of inequality. This study places specific importance on associational and organizational rights (AOR), which have not been previously studied but are expected to have significant potential effects on income distribution. Accordingly, the work's primary aim is to examine the impact of AOR on income inequality in 35 OECD countries from 2006 to 2021. Moreover, the study focuses on the critical economic factors of economic growth, unemployment, government expenditure, and trade openness. The study's findings indicate that AOR -specifically union and civil society freedoms- can reduce income inequality, thus presenting policymakers with a win-win opportunity. While unemployment emerges as a significant force exacerbating inequality from an economic perspective, government expenditure and trade openness act as mitigating factors against inequality. However, the study does not find a significant effect on economic growth.