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Are dictatorships more unequal? Economic growth and wage inequality during Portugal's estado novo, 1944-1974

  • Pedro Lains

    ()

  • Ester Gomes da Silva

    ()

  • Jordi Guilera

    ()

This paper relates the changes in the structure of the Portuguese economy to changes in wage inequality, during 1944-1974, when Portugal had its golden age of growth under a dictatorial regime. We present a new wage data set based on surveys conducted by the Portuguese Statistics Office (INE). Our data set covers the whole economy, including 16 sectors, and data on skilled and unskilled labor for manufacturing, and on male and female labor force for agriculture. To measure the evolution of wage inequality we estimate a Theil index. The results reveal an inverted-U curve with a peak in 1959. We proceed by estimating econometrically the relationship between wage inequality and per capita income growth, controlling for the influence of additional variables that capture the effects of industrialization, investment in human and physical capital, emigration, foreign trade and the size of the government. We find a significant relationship between wage inequality, real GDP per capita, human capital and the share of government spending.

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Paper provided by Universidad Carlos III, Instituto Figuerola de Historia y Ciencias Sociales in its series Working Papers in Economic History with number wp08-08.

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Date of creation: May 2008
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Handle: RePEc:cte:whrepe:wp08-08
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  1. James G. MacKinnon, 1995. "Numerical Distribution Functions for Unit Root and Cointegration Tests," Working Papers 918, Queen's University, Department of Economics.
  2. Cecilia Garcia-Penalosa & Eve Caroli & Philippe Aghion, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December.
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  8. Morrisson, Christian, 2000. "Historical perspectives on income distribution: The case of Europe," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 4, pages 217-260 Elsevier.
  9. Daron Acemoglu, 2003. "Cross-Country Inequality Trends," Economic Journal, Royal Economic Society, vol. 113(485), pages F121-F149, February.
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  13. David A. Dickey & Dennis W. Jansen & Daniel L. Thornton, 1991. "A primer on cointegration with an application to money and income," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 58-78.
  14. Daron Acemoglu, 2006. "A Simple Model of Inefficient Institutions," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(4), pages 515-546, December.
  15. Wood, Adrian, 1998. "Globalisation and the Rise in Labour Market Inequalities," Economic Journal, Royal Economic Society, vol. 108(450), pages 1463-82, September.
  16. Gonzalo, Jesus, 1994. "Five alternative methods of estimating long-run equilibrium relationships," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 203-233.
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