The strong relationship between economic democracy and income equality

Our recent work has focused upon the relationship between economic democracy and inequality across the OECD countries. A key finding – published in our recent policy brief (see figure above) – is that there is a “strong, negative and statistically significant correlation between the EDI (levels of economic democracy) and poverty and inequality measures. In other words, as EDI rises poverty rates and inequality fall. Furthermore our econometric analysis shows that there is “a strong predictive aspect of the EDI with regard to inequality.” In other words, high levels of economic democracy greatly contribute to reducing inequality. Although less statistically significant, we also find strong associations between high levels of economic democracy and countries with low rates of poverty.