Income Distribution, Political Instability, and Investment
@inproceedings{Alesina1993IncomeDP, title={Income Distribution, Political Instability, and Investment}, author={A. Alesina and R. Perotti}, year={1993} }
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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