IDEAS home Printed from https://ideas.repec.org/a/pid/journl/v45y2006i4p893-912.html
   My bibliography  Save this article

Which Institutions Are More Relevant Than Others in Inequality Mitigation?

Author

Listed:
  • Dawood Mamoon

    (Institute of Social Studies (ISS), The Hague, The Netherlands.)

Abstract

The paper estimates the respective contributions of legal, economic, political and social institutions on inequalities within countries across the globe, while using various measures of openness and trade policy as our control group. The results suggest that institutions have significant effects on inequality. Among legal institutions, rule of law and control for corruption have a stronger impact on inequality than voice and accountability. Though we find that countries which practice democracy are less prone to unequal outcomes, we also find that autocratic setups may not necessarily lead to greater inequalities. Both frameworks may carry redistributive effects, as both are found to be positively associated with the incomes of the poorest and negatively associated with the incomes of the richest. Secondly, whether a country is politically stable is rather a more decisive institutional factor apropos inequality than whether a country has an autocratic or a democratic orientation. Economic institutions also seem to play an important role in alleviating inequalities within countries. Whether the government is functioning effectively and whether it has a robust fiscal and monetary policy seems to have stronger impact on inequality than regulatory quality. Education for all, a proxy for social institutions, has a strong redistributive power. Overall, legal institutions trump any other institutional categories in reducing inequalities in a country. On the other hand, middle income group is most likely to benefit from good functioning institutions than any other income group.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Dawood Mamoon, 2006. "Which Institutions Are More Relevant Than Others in Inequality Mitigation?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 893-912.
    • Handle: RePEc:pid:journl:v:45:y:2006:i:4:p:893-912
    as

    Download full text from publisher

    File URL: http://www.pide.org.pk/pdf/PDR/2006/Volume4/893-912.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Raul A. Barreto, 2001. "Endogenous Corruption, Inequality and Growth: Econometric Evidence," School of Economics and Public Policy Working Papers 2001-02, University of Adelaide, School of Economics and Public Policy.
    2. Mamoon, D. & Murshed, S.M., 2005. "Are institutions more important than integration?," ISS Working Papers - General Series 19177, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    3. Mr. Sanjeev Gupta, 1998. "Does Corruption Affect Income Inequality and Poverty?," IMF Working Papers 1998/076, International Monetary Fund.
    4. Timothy Smeeding, 2002. "Globalization, Inequality and the Rich Countries of the G-20: Evidence from the Luxembourg Income Study," LIS Working papers 320, LIS Cross-National Data Center in Luxembourg.
    5. Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth : revisiting the evidence," Policy Research Working Paper Series 3004, The World Bank.
    6. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    7. Keefer, Philip & Knack, Stephen, 2002. "Polarization, Politics and Property Rights: Links between Inequality and Growth," Public Choice, Springer, vol. 111(1-2), pages 127-154, March.
    8. Pedro Telhado Pereira & Pedro Silva Martins, 2000. "Does education reduce wage inequality? Quantile regressions evidence from fifteen European countries," Nova SBE Working Paper Series wp379, Universidade Nova de Lisboa, Nova School of Business and Economics.
    9. Stanley L. Engerman & Kenneth Lee Sokoloff, 2002. "Factor Endowments, Inequality, and Paths of Development Among New World Economies," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2002), pages 41-110, August.
    10. Edwards, Sebastian, 1998. "Openness, Productivity and Growth: What Do We Really Know?," Economic Journal, Royal Economic Society, vol. 108(447), pages 383-398, March.
    11. Mamoon, Dawood, 2005. "Education for all is central to Higher Education Reforms in Developing Countries," MPRA Paper 2696, University Library of Munich, Germany.
    12. Ruben Segura-Cayuela, 2006. "Inefficient Policies, Inefficient Institutions and Trade," 2006 Meeting Papers 502, Society for Economic Dynamics.
    13. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    14. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    15. Mark Gradstein & Branko Milanovic & Yvonne Ying, 2001. "Democracy and Income In-Equality: An Empirical Analysis," CESifo Working Paper Series 411, CESifo.
    16. James Harrigan & Rita Balaban, 1999. "U.S. Wages in General Equilibrium: The Effects of Prices, Technology, and Factor Supplies, 1963-1991," NBER Working Papers 6981, National Bureau of Economic Research, Inc.
    17. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    18. John Cockburn, 2002. "Trade Liberalisation and Poverty in Nepal: A Computable General Equilibrium Micro Simulation Analysis," CSAE Working Paper Series 2002-11, Centre for the Study of African Economies, University of Oxford.
    19. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    20. Milanovic, Branko, 2000. "The median-voter hypothesis, income inequality, and income redistribution: an empirical test with the required data," European Journal of Political Economy, Elsevier, vol. 16(3), pages 367-410, September.
    21. Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 133-162, January.
    22. Timothy M Smeeding, 2002. "Globalisation, Inequality and the Rich Countries of the G-20: Evidence from the Luxembourg Income Study (LIS)," RBA Annual Conference Volume (Discontinued), in: David Gruen & Terry O'Brien & Jeremy Lawson (ed.),Globalisation, Living Standards and Inequality: Recent Progress and Continuing Challenges, Reserve Bank of Australia.
    23. Rose, Andrew K., 2004. "Do WTO members have more liberal trade policy?," Journal of International Economics, Elsevier, vol. 63(2), pages 209-235, July.
    24. Philippe Aghion, 2005. "Growth and Institutions," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 3-18, March.
    25. Patricia Justino, 2004. "Redistribution, Inequality and Political Conflict," HiCN Working Papers 05, Households in Conflict Network.
    26. Lofgren, Hans, 1999. "Trade reform and the poor in Morocco: a rural-urban general equilibrium analysis of reduced protection," TMD discussion papers 38, International Food Policy Research Institute (IFPRI).
    27. Giovanni Andrea Cornia & Tony Addison & Sampsa Kiiski, 2003. "Income Distribution Changes and their Impact in the Post-World War II Period," WIDER Working Paper Series DP2003-28, World Institute for Development Economic Research (UNU-WIDER).
    28. Feenstra, Robert C. (ed.), 2000. "The Impact of International Trade on Wages," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226239637.
    29. Timothy M. Smeeding, 2002. "Globalization, Inequality, and the Rich Countries of the G-20: Evidence from the Luxembourg Income Study (LIS)," Center for Policy Research Working Papers 48, Center for Policy Research, Maxwell School, Syracuse University.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dawood MAMOON, 2018. "When is trade good for the poor? Evidence from recent literature," Journal of Economics Bibliography, KSP Journals, vol. 5(1), pages 25-28, March.
    2. Mamoon, Dawood, 2020. "How Capitalism and Islamic Economics Supplement Each Other," MPRA Paper 103696, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mamoon, Dawood, 2017. "Governance over Economics: Making Globalisation Good for the Poor," MPRA Paper 82910, University Library of Munich, Germany.
    2. Dawood Mamoon, 2012. "Economic security, well functioning courts and a good government," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 39(8), pages 587-611, June.
    3. Mamoon, Dawood, 2001. "What May Constitute an Equal Society? Addressing Externalities of Globalization:," MPRA Paper 77335, University Library of Munich, Germany.
    4. Dawood Mamoon, 2011. "Relative Factor Return Gaps in Labour Markets and Global Integration," Economics Bulletin, AccessEcon, vol. 31(1), pages 969-988.
    5. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    6. Dawood Mamoon, 2015. "Good versus Bad Political Institutions and Economic Welfare?," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(4), pages 165-175, April.
    7. Dawood Mamoon & S. Mansoob Murshed, 2017. "When Education Explains Strong Institutions: Trade Policy also Matters," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(3), pages 1179-1210, April.
    8. Dawood Mamoon & S. Mansoob Murshed, 2006. "Trade Policy, Openness, Institutions," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(1), pages 99-119.
    9. Dawood Mamoon & S. Mansoob Murshed, 2009. "Want economic growth with good quality institutions? Spend on education," Education Economics, Taylor & Francis Journals, vol. 17(4), pages 445-468.
    10. Eicher, Theo S. & García-Peñalosa, Cecilia & Kuenzel, David J., 2018. "Constitutional rules as determinants of social infrastructure," Journal of Macroeconomics, Elsevier, vol. 57(C), pages 182-209.
    11. Eriṣ, Mehmet N. & Ulaṣan, Bülent, 2013. "Trade openness and economic growth: Bayesian model averaging estimate of cross-country growth regressions," Economic Modelling, Elsevier, vol. 33(C), pages 867-883.
    12. Harashima, Taiji, 2017. "Should a Government Fiscally Intervene in a Recession and, If So, How?," MPRA Paper 78053, University Library of Munich, Germany.
    13. Rodríguez-Pose, Andrés & Ketterer, Tobias, 2016. "Institutions vs. ‘First-Nature’ Geography – What Drives Economic Growth in Europe’s Regions?," CEPR Discussion Papers 11322, C.E.P.R. Discussion Papers.
    14. Axel Dreher & Pierre-Guillaume Méon & Friedrich Schneider, 2014. "The devil is in the shadow. Do institutions affect income and productivity or only official income and official productivity?," Public Choice, Springer, vol. 158(1), pages 121-141, January.
    15. Dawood Mamoon & Syed Mansoob Murshed, 2013. "Education bias of trade liberalization and wage inequality in developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(4), pages 572-604, June.
    16. Abdoul’ Mijiyawa, 2013. "Determinants of property rights institutions: survey of literature and new evidence," Economics of Governance, Springer, vol. 14(2), pages 127-183, May.
    17. Pierre‐Guillaume Méon & Khalid Sekkat, 2008. "Institutional Quality And Trade: Which Institutions? Which Trade?," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 227-240, April.
    18. Ann-Sofie Isaksson, 2011. "Social divisions and institutions: assessing institutional parameter variation," Public Choice, Springer, vol. 147(3), pages 331-357, June.
    19. Uwe Sunde, 2006. "Wirtschaftliche Entwicklung und Demokratie – Ist Demokratie ein Wohlstandsmotor oder ein Wohlstandsprodukt?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(4), pages 471-499, November.
    20. Zingales, Luigi & Rajan, Raghuram G., 2006. "The Persistence of Underdevelopment: Institutions, Human Capital, or Constituencies?," Working Papers 209, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.

    More about this item

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • K2 - Law and Economics - - Regulation and Business Law
    • K29 - Law and Economics - - Regulation and Business Law - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:45:y:2006:i:4:p:893-912. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Khurram Iqbal (email available below). General contact details of provider: https://edirc.repec.org/data/pideipk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.