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Does Clientelism Affect Income Inequality? Evidence from Panel Data

Ebney Ayaj Rana () and Mustafa Kamal
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Ebney Ayaj Rana: Department of Development Studies, University of Dhaka, Bangladesh and Andrew Young School of Policy Studies, Georgia State University, USA
Mustafa Kamal: Economic Policy Unit, Unnayan Onneshan, Bangladesh

Journal of Income Distribution, 2018, vol. 26, issue 1, 1-24

Abstract: This paper studies the determinants of income inequality in a panel of countries to give empirical evidence on the relationship between income inequality and clientelism, a relationship in which a person (or patron) provides one’s own resources or the resources he or she controls to persons with inferior positions (or clients) in return for their loyalty and service. Using different panel data techniques, especially group mean fully modified OLS estimator, and also allowing for control variables, cross-sectional heterogeneity and cross-sectional dependence, we find that in the long run, clientelism exerts a significant negative effect on income equality. The overall results of the study have implications for fiscal management strategies and political regime choice.

Keywords: clientelism; governance; government expenditure; income inequality; group-mean fully modified OLS estimator (search for similar items in EconPapers)
JEL-codes: D30 H11 H30 (search for similar items in EconPapers)
Date: 2018
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