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Explaining International and Intertemporal Variations in Income Inequality

  • Hongyi Li
  • Lyn Squire
  • Heng-fu Zou

This paper explores the propositions that, income inequality is relatively stable within countries; and that it varies significantly among countries. A new and expanded data set provides broad support for both propositions. Drawing on a political economy and capital market imperfection arguments to explain the intertemporal and international variation in inequality, the empirical analysis shows that the predicted variables associated with the first argument (a measure of civil liberties and the initial level of secondary schooling) and the second argument (a measure of financial depth and the initial distribution of land) are indeed important determinants of inequality.

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Paper provided by China Economics and Management Academy, Central University of Finance and Economics in its series CEMA Working Papers with number 73.

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Length: 9 pages
Date of creation: Jan 1998
Date of revision:
Publication status: Published in The Economic Journal, Volume 108, Issue 446, pages 26-43, January 1998
Handle: RePEc:cuf:wpaper:73
Contact details of provider: Web page: http://cema.cufe.edu.cn/

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  1. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
  2. Abhijit Banerjee & Andrew F. Newman, 1989. "Risk-Bearing and the Theory of Income Distribution," Discussion Papers 877, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Clarke, George R. G., 1992. "More evidence on income distribution and growth," Policy Research Working Paper Series 1064, The World Bank.
  4. Oded Galor & Joseph Zeira, 2013. "Income Distribution and Macroeconomics," Working Papers 2013-12, Brown University, Department of Economics.
  5. Datt, Gaurav, 1998. "Computational tools for poverty measurement and analysis," FCND discussion papers 50, International Food Policy Research Institute (IFPRI).
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