Military Expenditures and Income Inequality Evidence from a Panel of Transition Countries (1990-2015)

Antonella Biscione and Raul Caruso ()

Defence and Peace Economics, 2021, vol. 32, issue 1, 46-67

Abstract: This paper contributes to the literature on military spending by analyzing the relationship between military spending and income inequality in a panel of transition economies over the period 1990–2015. In particular, we exploit three different measures of military expenditures: (i) military spending in absolute terms; (ii) military expenditures per capita; (iii) military burden, namely the ratio between military expenditure and GDP. Findings highlight a positive relationship between military expenditures and income inequality captured by means of three different measures of inequality. Results are also confirmed after we performed a variety of robustness tests. Other results are worth noting and somehow puzzling. For example, military conscription appears to have a redistributional effect and when considering a non-linearity the results show that there could be a concave relationship between military spending and income inequality. In addition, when testing for the ‘crowding-out argument’ results show that expenditures for subsidies are negatively influenced by military spending so confirming the crowding-out argument but there is no significant evidence when considering education and health expenditures.

Date: 2021
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Working Paper: Military Expenditures and Income Inequality Evidence from a Panel of Transition Countries (1990-2015) (2018)
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DOI: 10.1080/10242694.2019.1661218

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