Increasing Income Inequality in Norway as a Consequence of a government Change?

Abstract

This paper aims to investigate whether the income inequality has increased as a result of the change of government, from a left-wing to a right-wing government in 2013. This will be investigated by examining changes in the income gap between “Leaders” and “Other Occupations” in Norway. The focus will be on changes done to the tax policies by the right-wing Government. A Difference-in-Difference regression was conducted with “Income From Work”, “Income From Capital”, “Total Income” and “Total Income After Tax” as the dependent variables. The data is from four Living Conditions Surveys in the period from 2012 to 2016. The results show that the income gap between “Leaders” and “Other Occupations” has increased after the government change, but the results vary between the income variables. However, based on the short time period that was analyzed, it is not possible to say if this is a continuous trend. The results are also consistent with the hypothesis that the change of government has led to increased income inequality, but from our analysis it is not possible to claim this is actually due to the change of government or other factors.