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Income Inequality, Capitalism, and Ethno-linguistic Fractionalization

Jan-Egbert Sturm () and Jakob de Haan ()

American Economic Review, 2015, vol. 105, issue 5, 593-97

Abstract: We examine the relationship between capitalism and income inequality for a large sample of countries using an adjusted economic freedom index as proxy for capitalism. Our results suggest that there is no robust relationship between economic freedom and Gini coefficients based on gross income. Subsequently, we analyze the relationship between income redistribution and ethno-linguistic fractionalization. We find that the impact of ethno-linguistic fractionalization on income redistribution is conditional on the level of economic freedom: countries that have a high degree of fractionalization redistribute income less, while capitalist countries that have a low degree of fractionalization redistribute income more.

JEL-codes: D31 D72 E02 H23 O15 O17 O43 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/aer.p20151112
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Handle: RePEc:aea:aecrev:v:105:y:2015:i:5:p:593-97