Income Distribution, Political Instability, and Investment

  title={Income Distribution, Political Instability, and Investment},
  author={A. Alesina and R. Perotti},
  • A. Alesina, R. Perotti
  • Published 1993
  • Economics
  • This paper successfully tests on a sample of 70 countries for the period 1960-85 the following hypotheses. Income inequality, by fueling social discontent, increases socio-political instability. The latter, by creating uncertainty in the politico-economic environment, reduces investment. As a consequence, income inequality and investment are inversely related. Since investment is a primary engine of growth, this paper identifies a channel for an inverse relationship between income inequality… CONTINUE READING
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