Geography of Income Inequality and its Selected Underlying Factors: a Country-Level Cross Sectional Analysis
Abstract
We construct a new good-quality standardized income inequality data set for 147 countries. We use Bayesian model averaging in combination with a multiple imputation approach in order to identify robust correlates of inequality from a larger pool of 26 potential predictors determined from the literature.
In addition to the global level analysis, we also separately examine the determinants of inequality in four broader regional categories of countries. The results document significant macro-regional specificity both of levels and predictors of inequality suggesting that the global-level analysis can provide only an incomplete picture.
While globalization associates with lower inequality in Western countries, it has opposite effects in Latin America, Sub-Saharan Africa or post-communist countries. Age structure, the extent of social spending, or colonial history are another important factors with regionally specific impacts on inequality.