EU Membership and Income Inequality: Escaping The Single and Binary Treatment Approach

Increasing income inequalities have raised concerns about the resilience of globalization to socio-political disturbances, such as those stemming from populism. Despite the vast literature on the openness-inequalities nexus, surprisingly little is known about the role that regionalization plays in shaping income distributions. This paper tackles this issue, focusing on the 2004 enlargement of the European Union (EU), and applying the newly introduced method belonging to the family of difference-in-differences (DID) estimators. It allows for multiple non-binary treatments. Full-fledged membership was preceded by association status, and accession to the EU was accompanied or followed by engagement in other layers of integration (European Monetary Union and Schengen Area). Controlling for these features, I was able to assess whether the pure EU effect contributed to increases in income inequalities. JEL CLASSIFICATION F15, F16, F66, E24, E25