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Roots of Inequality

Author

Listed:
  • Galor, Oded

    (Brown University)

  • Klemp, Marc

    (University of Copenhagen)

  • Wainstock, Daniel Crisóstomo

    (Brown University)

Abstract

Why does inequality vary across societies? We advance the hypothesis that in a market economy, where earning differentials reflect variations in productive traits among individuals, a significant component of the differences in inequality across societies can be attributed to variation in societal interpersonal diversity, shaped by the prehistorical out-of-Africa migration. Exploring the roots of inequality within the US population, we find supporting evidence for our hypothesis: variation in the inequality across groups of individuals originating from different ancestral backgrounds can be traced to the degree of diversity of their ancestral populations. This effect is sizable: a move from the lowest to the highest level of diversity in the sample is associated with an increase in the Gini index from the median to the 75th percentile of the inequality distribution.

Suggested Citation

  • Galor, Oded & Klemp, Marc & Wainstock, Daniel Crisóstomo, 2023. "Roots of Inequality," IZA Discussion Papers 16210, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16210
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    References listed on IDEAS

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    1. Henry S. Farber & Daniel Herbst & ilyana Kuziemko & Suresh Naidu, 2018. "Unions and Inequality Over the Twentieth Century: New Evidence from Survey Data," Working Papers 620, Princeton University, Department of Economics, Industrial Relations Section..
    2. Fatih Guvenen & Burhanettin Kuruscu & Serdar Ozkan, 2014. "Taxation of Human Capital and Wage Inequality: A Cross-Country Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(2), pages 818-850.
    3. Oded Galor & Omer Moav, 2000. "Ability-Biased Technological Transition, Wage Inequality, and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(2), pages 469-497.
    4. Louis Putterman & David N. Weil, 2010. "Post-1500 Population Flows and The Long-Run Determinants of Economic Growth and Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(4), pages 1627-1682.
    5. Henry S Farber & Daniel Herbst & Ilyana Kuziemko & Suresh Naidu, 2021. "Unions and Inequality over the Twentieth Century: New Evidence from Survey Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(3), pages 1325-1385.
    6. Galor, Oded & Klemp, Marc & Wainstock, Daniel, 2023. "The Impact of the Prehistoric Out-of-Africa Migration on Cultural Diversity," CEPR Discussion Papers 18158, C.E.P.R. Discussion Papers.
    7. Fearon, James D, 2003. "Ethnic and Cultural Diversity by Country," Journal of Economic Growth, Springer, vol. 8(2), pages 195-222, June.
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    More about this item

    Keywords

    inequality; diversity; culture; out-of-Africa migration;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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