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Fundamental Determinants of Inequality and the Role of Government


  • Vito Tanzi


This paper discusses the fundamental determinants of inequality. These are identified as world or market forces, social norms, ownership of real and human capital, and the role of government. The change in the relative role of these factors in determining inequality during economic development is analyzed.

Suggested Citation

  • Vito Tanzi, 1998. "Fundamental Determinants of Inequality and the Role of Government," IMF Working Papers 98/178, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:98/178

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    References listed on IDEAS

    1. Adler, Martin & Schmid, Kai Daniel, 2013. "Factor Shares and Income Inequality. Empiral Evidence from Germany 2002 – 2008," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 133(2), pages 121-132.
    2. Peter Hoeller & Isabelle Joumard & Mauro Pisu & Debra Bloch, 2012. "Less Income Inequality and More Growth – Are They Compatible? Part 1. Mapping Income Inequality Across the OECD," OECD Economics Department Working Papers 924, OECD Publishing.
    3. A. B. Atkinson, 2009. "Factor shares: the principal problem of political economy?," Oxford Review of Economic Policy, Oxford University Press, vol. 25(1), pages 3-16, Spring.
    4. Douglas Gollin, 2002. "Getting Income Shares Right," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 458-474, April.
    5. Luci Ellis & Kathryn Smith, 2010. "The Global Upward Trend in the Profit Share," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 56(3), pages 231-256.
    6. Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2007. "The external wealth of nations mark II: Revised and extended estimates of foreign assets and liabilities, 1970-2004," Journal of International Economics, Elsevier, vol. 73(2), pages 223-250, November.
    7. Feldstein, Martin, 2008. "Did wages reflect growth in productivity?," Journal of Policy Modeling, Elsevier, vol. 30(4), pages 591-594.
    8. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    9. Feldstein, Martin, 2008. "Did Wages Reflect Growth in Productivity?," Scholarly Articles 2794832, Harvard University Department of Economics.
    10. Michael Bruno & Jeffrey D. Sachs, 1985. "Economics of Worldwide Stagflation," NBER Books, National Bureau of Economic Research, Inc, number brun85-1, January.
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    Cited by:

    1. Susan Steiner, 2005. "Decentralisation and Poverty Reduction: A Conceptual Framework for the Economic Impact," Public Economics 0508006, EconWPA.
    2. J. Mohan Rao, 1999. "Globalization and the Fiscal Autonomy of the State," Working Papers wp25, Political Economy Research Institute, University of Massachusetts at Amherst.
    3. Taschowsky, Peter, 2000. "Soziale Sicherheit und Wachstum," Hannover Economic Papers (HEP) dp-237, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    4. Belkacem Laabas and Imed Limam, "undated". "Impact of public policies on poverty, income distribution and growth," API-Working Paper Series 0401, Arab Planning Institute - Kuwait, Information Center.
    5. Chu, Ke-young & Davoodi, Hamid & Gupta, Sanjeev, 2003. "Income distribution and tax, and government social spending policies in developing countries," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34918, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    6. Hong-Ghi Min, 2002. "Inequality, the price of nontradables, and the real exchange rate : theory and cross-country evidence," Policy Research Working Paper Series 2758, The World Bank.
    7. repec:dau:papers:123456789/4994 is not listed on IDEAS
    8. Vassili Prokopenko & Paul Holden, 2001. "Financial Development and Poverty Alleviation; Issues and Policy Implications for Developing and Transition Countries," IMF Working Papers 01/160, International Monetary Fund.
    9. Thi Hong Hanh Pham, 2015. "Income Inequality and Foreign Aid," Working Papers hal-01158240, HAL.
    10. Hong-Ghi Min & Sang-Ook Shin & Judith A. McDonald, 2015. "Income Inequality and the Real Exchange Rate: Linkages and Evidence," Annals of Economics and Finance, Society for AEF, vol. 16(1), pages 115-141, May.
    11. Alari Paulus, 2004. "Income Inequality and its Decomposition: the Case of Estonia," University of Tartu - Faculty of Economics and Business Administration,in: Modelling the Economies of the Baltic Sea Region, volume 17, chapter 7, pages 206-235 Faculty of Economics and Business Administration, University of Tartu (Estonia).
    12. Jorge N. Valero-Gil & Jose A. Tijerina-Guajardo, 2002. "Effects of Education on the Intergenerational Transmission of Labor Income in Mexico," Eastern Economic Journal, Eastern Economic Association, vol. 28(3), pages 381-392, Summer.


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