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DP4739 Inequality and Institutions

Author(s): Alberto Chong , Mark Gradstein
Publication Date: November 2004
Keyword(s): institutions , inequality , governance , causality
JEL(s): D70 , O15 , O17
Programme Areas: Institutions and Economic Performance , Public Policy
Link to this Page: www.cepr.org/pubs/dps/DP4739.asp


This Paper presents theory and evidence on the relationship between inequality and institutional quality. We exhibit a model in which the two dynamically reinforce each other and set to test this relationship with a broad array of institutional measures. We establish the double causality between institutional strength and a more equal distribution of income and show its robustness to different data sources that cover various time-spans and to changes in specification.

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