The Effects of Economic Globalisation and Ethnic Fractionalisation on Redistribution

Regina Pleninger () and Jan-Egbert Sturm
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Regina Pleninger: KOF Swiss Economic Institute, ETH Zurich, Switzerland

No 19-465, KOF Working papers from KOF Swiss Economic Institute, ETH Zurich

Abstract: We examine the effect of economic globalisation on income redistribution and hypothesise that it depends on ethnic fractionalisation. In highly fractionalised countries, powerful ethnicities are able to extract globalisation-induced benefits, whereas their governments face substantial political obstacles when redistributing income between ethnic groups. Using the newly constructed KOF Globalisation Index, we find supportive evidence for the interactive effect of ethnic fractionalisation and de jure financial globalisation on redistribution. In particular, the total effect of de jure financial globalisation on redistribution is negative in highly fractionalised countries. Governments in these countries are apparently not only reluctant to offset potential consequences stemming from de jure financial globalisation, but they even reduce redistribution to lower levels.

Keywords: Income redistribution; Globalisation; Ethnic fractionalisation.; Income redistribution; Globalisation; Ethnic fractionalisation (search for similar items in EconPapers)
JEL-codes: D31 D63 F15 O11 O15 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2019-12
New Economics Papers: this item is included in nep-int
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https://doi.org/10.3929/ethz-b-000383383 (application/pdf)

Related works:
Journal Article: The effects of economic globalisation and ethnic fractionalisation on redistribution (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:kof:wpskof:19-465

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