Ethnic Stratification and Patterns of Income Inequality Around the World: A Cross-National Comparison of 123 Countries, Based on a New Index of Historic Ethnic Exploitation

Income distributions within countries vary tremendously in global comparison. While income inequality is generally higher in the United States than in Europe, extreme differences prevail in Sub-Saharan Africa and Latin America. Income inequality is particularly low in Scandinavia and Central East Europe, but also in Japan. In the last decades, global economic inequality between nation states has been declining while within-nation inequality has been increasing in many regions. The purpose of this paper is to explain the huge international variations in within-country income inequality, focusing upon the role of present-day ethnic diversity and historic ethnic exploitation (slavery)—two aspects rather neglected in most comparative sociological research. Three hypotheses about the origins and factors producing international differences in intra-national patterns of income inequality are formulated and tested on the basis of a newly created aggregate data set of 123 countries. Also a new indicator measuring historic ethnic exploitation on a global scale is introduced. In our empirical analysis, we describe the substantial differences in within-country income inequality on the global scale, and present evidence for the impact of historic and current ethnic structures as well as of political institutional factors both through descriptive and regression analyses. The results support the thesis of an impact of historic ethnic exploitation; it can be reduced by redistributive political institutions (welfare state, federalism, Communist systems). The effect of ethnic heterogeneity can be extinguished fully by these institutions.