Inequality, Tolerance, and Growth

Christian Bjørnskov

No 04-8, Working Papers from University of Aarhus, Aarhus School of Business, Department of Economics

Abstract: This paper argues for the importance of individuals’ tolerance of inequality for

economic growth. By using the political ideology of governments as a measure of

revealed tolerance of inequality, the paper shows that controlling for ideology improves

the accuracy with which the effects of inequality are measured. Results show that

inequality reduces growth but more so in societies where people perceive it as being

relatively unfair. Further results indicate that legal quality and social trust are likely

transmission channels for the effects of inequality.

Keywords: Inequality; Growth; Social Capital and Social Norms (search for similar items in EconPapers)
JEL-codes: D63 O40 Z13 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2004-05-27
New Economics Papers: this item is included in nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:aareco:2004_008

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