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Long-term relatedness and income distribution: understanding the deep roots of inequality

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posted on 16.09.2022, 10:38 authored by Trung V VuTrung V Vu

This article explores the role of long-term relatedness between countries, captured by an index of genetic distance, in driving worldwide differences in income inequality. The main hypothesis is that genetic distance gives rise to barriers to the international diffusion of redistributive policies and measures, and institutions, leading to greater income disparities. Using cross-country data, I consistently find that countries that are genetically distant to Denmark—the world frontier of egalitarian income distribution—tend to suffer from higher inequality, ceteris paribus. I also demonstrate that genetic distance is associated with greater bilateral differences in income inequality between countries. Employing data from the European Social Survey, I document that second-generation Europeans descending from countries with greater genetic distance to Denmark are less likely to exhibit positive attitudes towards equality. Further evidence suggests that effective fiscal redistribution is a key mechanism through which genetic distance to Denmark transmits to greater income inequality.

History

School

  • Business and Economics

Department

  • Economics

Published in

Oxford Economic Papers

Publisher

Oxford University Press (OUP)

Version

VoR (Version of Record)

Rights holder

© Oxford University Press

Publisher statement

This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial License (https://creativecommons.org/licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. For commercial re-use, please contact journals.permissions@oup.com

Publication date

2022-09-15

Copyright date

2022

ISSN

0030-7653

eISSN

1464-3812

Language

en

Depositor

Dr Trung Vu. Deposit date: 16 September 2022

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