Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/107372
Authors: 
Sturm, Jan-Egbert
de Haan, Jakob
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5169
Abstract: 
We examine the relationship between capitalism and income inequality for a large sample of countries using an adjusted economic freedom index as proxy for capitalism and Gini coefficients based on gross-income as proxy for income inequality. Our results suggest that there is no robust relationship between economic freedom and income inequality. In addition, we analyze the relationship between income redistribution (measured by the ratio of the income distribution resulting from market processes and the income distribution after redistribution) and ethno-linguistic fractionalization. We find that the impact of ethno-linguistic fractionalization on income redistribution is conditional on the level of economic freedom: countries that have a high degree of fractionalization have less income redistribution, while capitalist countries that have a low degree of fractionalization have more income distribution.
Subjects: 
income inequality
redistribution
economic freedom
ethno-linguistic fractionalization
JEL: 
D31
D63
F02
O11
O15
Document Type: 
Working Paper

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