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Income Inequality and the Size of Government: A Causal Analysis

The result's identifiers

  • Result code in IS VaVaI

    <a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216224%3A14560%2F18%3A00115016" target="_blank" >RIV/00216224:14560/18:00115016 - isvavai.cz</a>

  • Result on the web

    <a href="http://ftp.iza.org/dp12015.pdf" target="_blank" >http://ftp.iza.org/dp12015.pdf</a>

  • DOI - Digital Object Identifier

Alternative languages

  • Result language

    angličtina

  • Original language name

    Income Inequality and the Size of Government: A Causal Analysis

  • Original language description

    Expansion of the public sector and redistributive policies may reduce income inequality, but formal tests suffer from the problem of endogeneity of government size with respect to the distribution of income. Studying 30 European countries over the period 2004-2015, we apply instrumental variable estimation techniques to identify a causal relationship between income inequality and government size, measured as the government expenditure share in GDP. Using a novel instrument – the number of political parties in the ruling coalition – we find that accounting for the possible endogeneity of government size increases the magnitude of the estimated negative effects. Our findings thus suggest that much of the literature underestimates the true role of the government in attenuating income inequality. The estimated relationship between income inequality and government size persists in a series of robustness checks.

  • Czech name

  • Czech description

Classification

  • Type

    J<sub>ost</sub> - Miscellaneous article in a specialist periodical

  • CEP classification

  • OECD FORD branch

    50202 - Applied Economics, Econometrics

Result continuities

  • Project

  • Continuities

    S - Specificky vyzkum na vysokych skolach

Others

  • Publication year

    2018

  • Confidentiality

    S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Data specific for result type

  • Name of the periodical

    IZA Discussion papers

  • ISSN

    2365-9793

  • e-ISSN

  • Volume of the periodical

    2018

  • Issue of the periodical within the volume

    12015

  • Country of publishing house

    DE - GERMANY

  • Number of pages

    24

  • Pages from-to

    1-24

  • UT code for WoS article

  • EID of the result in the Scopus database