Too many and too much? Special-interest groups and inequality at the turn of the century

Domenico Rossignoli

Rivista Internazionale di Scienze Sociali, 2015, vol. 123, issue 3, 337-366

Abstract: An increasing number of scholars argue that income inequality is related to institutional and cultural factors, as well as economic ones. I rely on Mancur Olson (1965)’s theories on the effect of group activities on economic performance to explore the possible link between the number of special- interest groups (SIGs) and the level of income inequality in a country, including SIGs among the long-run determinants of income inequality. Thus, assuming incomplete group formation, the paper investigates whether the number of SIGs in a country is related with the value of income inequality as expressed by the Gini index. The analysis is carried on through panel fixed-effects regressions on a sample of observations on 48 countries in the period 1985-2005. The results identify a non-linear relationship between the number of SIGs and income inequality, suggesting that SIGs tend to lower inequality at lower levels of income, but increase it in high income countries.

Keywords: Economic development; Inequality; Interest groups; Political economy (search for similar items in EconPapers)
JEL-codes: D31 D63 O11 O15 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:vep:journl:y:2015:v:123:i:3:p:337-366

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