Abstract
Within the fundamental determinants of cross‐country income inequality, political institutions represent a hallmark factor that societies can influence. Focusing on the portion of inequality explainable by differences in political institutions, we decompose annual cross‐country Gini coefficients from 1960–2012. Although inequality has marginally decreased since 1988, the portion that cannot be explained by political institutions has increased markedly, with the explanatory power of institutions falling rapidly from the late 1980s to the early 1990s. This result prevails when using alternative variables, weightings, samples, and controls, and appears to be unlikely to be driven by contemporary regional events alone. However, we find that the link between institutions and income levels has become increasingly nonlinear as countries with the most inclusive political institutions enjoy even higher incomes than before. Our results imply that, if we hold societies responsible for their political institutions, cross‐country inequality has become notably less fair since the late 1980s.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.