Discussion paper

DP4739 Inequality and Institutions

This Paper presents theory and evidence on the relationship between inequality and institutional quality. We exhibit a model in which the two dynamically reinforce each other and set to test this relationship with a broad array of institutional measures. We establish the double causality between institutional strength and a more equal distribution of income and show its robustness to different data sources that cover various time-spans and to changes in specification.


Chong, A and M Gradstein (2004), ‘DP4739 Inequality and Institutions‘, CEPR Discussion Paper No. 4739. CEPR Press, Paris & London. https://cepr.org/publications/dp4739