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Roots of Inequality

Author

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  • Galor, Oded
  • Klemp, Marc
  • Wainstock, Daniel C.

Abstract

Why does inequality vary across societies? We advance the hypothesis that in a mar- ket economy, where earning differentials re ect variations in productive traits among individuals, a significant component of the differences in inequality across societies can be attributed to variation in societal interpersonal diversity, shaped by the prehistorical out-of-Africa migration. Exploring the roots of inequality within the US population, we find supporting evidence for our hypothesis: variation in the inequality across groups of individuals originating from different ancestral backgrounds can be traced to the degree of diversity of their ancestral populations. This effect is sizable: a move from the lowest to the highest level of diversity in the sample is associated with an increase in the Gini index from the median to the 75th percentile of the inequality distribution.

Suggested Citation

  • Galor, Oded & Klemp, Marc & Wainstock, Daniel C., 2023. "Roots of Inequality," GLO Discussion Paper Series 1283, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:1283
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    References listed on IDEAS

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    1. Louis Putterman & David N. Weil, 2010. "Post-1500 Population Flows and The Long-Run Determinants of Economic Growth and Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(4), pages 1627-1682.
    2. Oded Galor & Omer Moav, 2000. "Ability-Biased Technological Transition, Wage Inequality, and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(2), pages 469-497.
    3. Oded Galor & Marc Klemp & Daniel C. Wainstock, 2023. "The Impact of the Prehistoric Out-of-Africa Migration on Cultural Diversity," CESifo Working Paper Series 10379, CESifo.
    4. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555, Elsevier.
    5. Fatih Guvenen & Burhanettin Kuruscu & Serdar Ozkan, 2014. "Taxation of Human Capital and Wage Inequality: A Cross-Country Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(2), pages 818-850.
    6. Henry S Farber & Daniel Herbst & Ilyana Kuziemko & Suresh Naidu, 2021. "Unions and Inequality over the Twentieth Century: New Evidence from Survey Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(3), pages 1325-1385.
    7. Fearon, James D, 2003. "Ethnic and Cultural Diversity by Country," Journal of Economic Growth, Springer, vol. 8(2), pages 195-222, June.
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    Cited by:

    1. Bertoli, Simone & Clerc, Melchior & Loper, Jordan & Roca Fernández, Èric, 2025. "Migration and the epidemiological approach: Time and self-selection into foreign ancestries matter," Journal of Development Economics, Elsevier, vol. 176(C).
    2. Galor, Oded, 2024. "Unified Growth Theory: Engines of Growth and Inequality in the Wealth of Nations," IZA Discussion Papers 17491, IZA Network @ LISER.

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    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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