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Inequality and Institutions

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  • Gradstein, Mark
  • Chong, Alberto

Abstract

This Paper presents theory and evidence on the relationship between inequality and institutional quality. We exhibit a model in which the two dynamically reinforce each other and set to test this relationship with a broad array of institutional measures. We establish the double causality between institutional strength and a more equal distribution of income and show its robustness to different data sources that cover various time-spans and to changes in specification.

Suggested Citation

  • Gradstein, Mark & Chong, Alberto, 2004. "Inequality and Institutions," CEPR Discussion Papers 4739, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:4739
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    More about this item

    Keywords

    Inequality; Institutions; Governance; Causality;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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