Economics at your fingertips  

Statehood experience and income inequality: A historical perspective

Trung Vu

Economic Modelling, 2021, vol. 94, issue C, 415-429

Abstract: This study investigates the effects of accumulated statehood experience on contemporary income inequality. Previous studies reveal numerous “proximate” causes of income inequality, but little is known about the fundamental determinants of this widespread social concern. The novelty of this paper lies in the adoption of a historical approach that sheds light on the deep historical roots of cross-country differences in income inequality. The central hypothesis is that statehood experience, measured by the extended state history index, exerts persistent impacts on present-day income inequality. Employing data for 128 countries, I find strong and robust evidence of a U-shaped relationship between state history and income inequality. Accumulated statehood experience, up to a point, strengthens fiscal and legal capabilities, leading to a more egalitarian distribution of income. However, excessive state experience is associated with early emergence of extractive institutions and powerful elites, resulting in persistent inequality. Further analyses suggest that the distributional effects of state history are mediated through institutions.

Keywords: State history; Income inequality; Institutions; Underdevelopment (search for similar items in EconPapers)
JEL-codes: N00 O11 O15 O43 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Statehood experience and income inequality: A historical perspective (2020) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.econmod.2020.10.018

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2023-08-12
Handle: RePEc:eee:ecmode:v:94:y:2021:i:c:p:415-429