Military Expenditure and Income Inequality in Transition Economies: Fiscal Priorities and Structural Heterogeneity, 1990-2024

Raul Caruso (), Antonella Biscione () and Stéphane Mussard ()
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Antonella Biscione: Department of Economics, University of Foggia, CESPIC, Catholic University “Our Lady of Good Counsel”
Stéphane Mussard: CHROME, University of Nîmes AIRESS, University Mohammed 6 Polytechnic

No 1029, Working Papers from European Centre of Peace Science, Integration and Cooperation (CESPIC), Catholic University 'Our Lady of Good Counsel'

Abstract: This paper examines the association between military expenditure and disposable-income inequality in a panel of transition economies over the period 1990–2024. The analysis distinguishes three metrics of military expenditure: (i) military spending per capita, (ii) military spending as a share of GDP; and (iii) military spending as a share of total government expenditure. Pooled fractional-response estimates show that the positive association with inequality is concentrated in the share of government expenditure devoted to the military. A Mundlak correlated random-effects decomposition highlights that the association is driven by persistent between-country differences rather than by within-country changes over time. The OLS and Gini-regression robustness checks support the same interpretation. Panel Granger non-causality tests indicate bidirectional predictive precedence between military budget share and inequality. Finally, the regression-tree analysis shows that this relationship is embedded in wider fiscal, institutional, macroeconomic, demographic configurations. Overall, the evidence suggests that military spending matters for inequality mainly as a component of persistent fiscal and structural country profiles.

Keywords: military expenditure; income inequality; transition economies; structural heterogeneity; regression tree. (search for similar items in EconPapers)
Pages: 28pages
Date: 2026-05
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