Income Inequality, Capitalism, and Ethno-linguistic Fractionalization
Jan-Egbert Sturm, Jakob De Haan
American Economic Review · 2015 · Volume 105 · Issue 5
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.
Keywords
Personal Income, Wealth, and Their Distributions, Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior, Institutions and the Macroeconomy, Taxation and Subsidies: Externalities, Redistributive Effects, Environmental Taxes and Subsidies, Economic Development: Human Resources, Human Development, Income Distribution, Migration, Formal and Informal Sectors, Shadow Economy, Institutional Arrangements, Institutions and Growth
Enable JavaScript for citation tools and additional paper interactions.