Genetic diversity and income inequality: The case for Y-chromosome DNA diversity

Abstract

This paper examines how patrilineal genetic diversity affects income inequality. We create a new measure of genetic diversity by implementing the notion of Y chromosome diversity. Using a cross section of more than 120 countries and controlling for other geographic and economic variations, we find that countries with higher genetic diversity also have higher income inequality. We show that this measure captures variations in income inequality that is unexplained by previous popular diversity indices and overcomes some of the empirical issues of those measures. Additionally, we find that countries with higher degree of genetic diversity have lower levels of social cooperation and government efficiency, which then leads to a decrease in redistribution and an increase in income inequality.