American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Income Inequality, Capitalism, and Ethno-linguistic Fractionalization
American Economic Review
(pp. 593–97)
Abstract
We examine the relationship between capitalism and income inequality for a large sample of countries using an adjusted economic freedom index as proxy for capitalism. Our results suggest that there is no robust relationship between economic freedom and Gini coefficients based on gross income. Subsequently, we analyze the relationship between income redistribution and ethno-linguistic fractionalization. We find that the impact of ethno-linguistic fractionalization on income redistribution is conditional on the level of economic freedom: countries that have a high degree of fractionalization redistribute income less, while capitalist countries that have a low degree of fractionalization redistribute income more.Citation
Sturm, Jan-Egbert, and Jakob De Haan. 2015. "Income Inequality, Capitalism, and Ethno-linguistic Fractionalization." American Economic Review 105 (5): 593–97. DOI: 10.1257/aer.p20151112Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- E02 Institutions and the Macroeconomy
- H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration
- O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- O43 Institutions and Growth