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Colonization, Institutions, and Inequality, A note on some suggestive evidence

  • Denis Cogneau


    (DIAL, IRD, Paris)

  • Charlotte Guénard



What is the kind of institutions that affect economic inequalities? Using a database on national income inequality for 73 non-European countries, we show that 'good governance' not only contributes to the level of income but also to a more equal distribution by increasing the income share of the middle class. Beside this effect of the quality of capitalist institutions, we also find an inverted U relationship between inequalities and the extent of European settlement. We finally find a large and robust correlation between the pre-colonial population density and the present equality of income distribution. We argue that this latter correlation may have to do with institutional dimensions that are not captured by usual measures of institutional quality in available databases. Countries which were more densely populated in 1500 have indeed worse 'governance' but give larger income shares to the poor. They had more structured pre-colonial States, more often resisted to colonisation, and more often adopted a mixed economic system. Many of them in fact ended with a more equal land distribution. The equality in the distribution of landholdings does appear as an important determinant of the overall equality of income and of poverty which is independent from 'usual' governance issues. _________________________________ Quels sont les types d’institutions qui influencent les inégalités économiques ? En utilisant une base de données sur les inégalités nationales de revenu sur un échantillon de 73 pays non européens, nous montrons que la « bonne gouvernance » contribue non seulement au niveau de revenu moyen des pays mais aussi à une distribution plus égalitaire à travers l’accroissement de la part de revenu reçue par la classe moyenne. A côté de cet effet de la qualité des institutions capitalistes, nous trouvons une relation en U inversé entre les inégalités et l’importance de la population de descendance européenne. Nous trouvons enfin une corrélation large et robuste entre la densité de population précoloniale et l’égalité de la distribution actuelle du revenu. Nous argumentons que cette dernière corrélation reflète des dimensions institutionnelles qui ne sont pas captées par les mesures usuelles de qualité des institutions dans les bases de données disponibles. Les pays qui étaient les plus densément peuplés au seizième siècle ont en effet une moins bonne gouvernance mais accordent une plus large part du revenu aux plus pauvres. Ils avaient des Etats précoloniaux plus structurés, ont résisté plus souvent à la colonisation, et ont adopté plus souvent un système d’économie mixte. Beaucoup d’entre eux présentent une répartition des terres plus égalitaire. L’égalité de la distribution des terres apparaît comme un déterminant important de l’égalité globale des revenus et de la pauvreté, indépendamment des standards de « gouvernance » usuels.

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Paper provided by DIAL (Développement, Institutions et Mondialisation) in its series Working Papers with number DT/2003/05.

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Length: 45 pages
Date of creation: Jun 2003
Date of revision:
Handle: RePEc:dia:wpaper:dt200305
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