Panel data analysis of internal conflict and income inequality
Article Sidebar
Main Article Content
Abstract
The study determines how worsening internal and external conflict affects income inequality. The paper accounts for contributing variables and analyzes panel data in an unbalanced panel of 106 countries from 1988 to 2018—the panel data model groups by development status. The econometric model uses Driscoll and Kraay standard errors to account for heteroscedasticity, cross-sectional dependence, and autocorrelation. Worsening internal conflict increases income inequality in developing countries but not in developed countries. Worsening of internal conflict by one standard deviation increases income inequality by 0.068 in developing counties. External conflict does not noticeably affect income inequality in developed or developing panels.
Keywords:
Downloads
Article Details
References
Acemoglu, D., Naidu, S., Restrepo, P., and Robinson, J. (2013). Democracy, redistribution and inequality. National Bureau of Economic Research Working Paper 19746. https://doi.org/10.3386/w19746
Alesina, A., and Perotti, R. (1996). Income distribution, political instability, and investment. European Economic Review, 40(6), 1203-1228. https://doi.org/10.1016/0014-2921(95)00030-5
Ariely, G., and Uslaner, E. (2017). Corruption, fairness, and inequality. International Political Science Review, 38(3), 349-362. https://doi.org/10.1177/0192512116641091
Baltagi, and Badi, H. (2001). Econometric Analysis of Panel Data. Wiley, John and Sons.
Barro, R. (2000). Inequality and growth in panel of countries. Journal of Economic Growth, 5, 5-32. https://doi.org/10.1023/A:1009850119329
Barry, B. (2005). Why Social Justice Matters. Cambridge: Polity Press.
Bircan, C., Brück, T. and Vothknecht, M. (2017). Violent conflict and inequality. Oxford Development Studies, 45:2, 125-144. https://doi.org/10.1080/13600818.2016.1213227
Buhaug, H., Cederman, L., and Gleditsch, K. S. (2014). Square pegs in round holes: Inequalities, grievances, and civil war. International Studies Quarterly, 58, 418-431. https://doi.org/10.1111/isqu.12068
Burtless, G. (2009). Demographic Transformation and Economic Inequality, ch. 18 in W. Salverda, B. Nolan, and T. M. Smeeding (eds), The Oxford Handbook of Economic Inequality, Oxford, Oxford University Press, 435-454.
Cederman, L., Weidmann, N. B., and Gleditsch, K. S. (2011). Horizontal inequalities and ethnonationalist civil war: A global comparison, American Political Science Review, 105, 478-495. https://doi.org/10.1017/S0003055411000207
Collier, P. (1999). On the economic consequences of civil war. Oxford Economic Papers, 51, 168-183. https://doi.org/10.1093/oep/51.1.168
Collier, P., and Hoeffler, A. (2002). Military expenditure: Threats, aid and arms races (World Bank Policy Research Working Paper No. 2927). Washington, DC: World Bank. https://doi.org/10.1596/1813-9450-2927
Collier, P., and Hoeffler, A. (2004). Greed and grievance in civil war. Oxford Economic Papers, 56, 563-595. https://doi.org/10.1093/oep/gpf064
Collier, P., and Hoeffler, A. (2007). Civil war. In T. Sandler and K. Hartley (Eds.), Handbook of defense economics (pp. 711-739). Elsevier. https://doi.org/10.1016/S1574-0013(06)02023-0
Dabla-Norris, E., Kochhar, K., Suphaphiphat, N., Ricka, F. and Tsounta, E. (2015). Causes and Consequences of Income Inequality: A Global Perspective. IMF Staff Discussion Note SDN/15/13. Washington, DC: IMF. https://doi.org/10.5089/9781513555188.006
Deininger, K., and Olinto, P. (2000). Asset distribution, inequality, and growth (World Bank Policy Research Working Paper No. 2375). Washington, DC: World Bank. https://doi.org/10.1596/1813-9450-2375
Deininger, K., and Squire, L. (1996). A new data set measuring income inequality. The World Bank Economic Review. 10(3), 565-591. https://doi.org/10.1093/wber/10.3.565
Dobson, S., and Ramlogan, C. (2009). Is there an openness Kuznets curve?" Kyklos. 62(2), 226-238. https://doi.org/10.1111/j.1467-6435.2009.00433.x
Dorling, D. (2011). Injustice and the 1%. London and New York, NY: Verso.
Driscoll, J., and Kraay, A. (1998). Consistent covariance matrix estimation with spatially dependent data. Review of Economics and Statistics, 80, 549-560. https://doi.org/10.1162/003465398557825
Duquette, N. (2018). Inequality and philanthropy: High-income giving in the United States 1917-2012. Explorations in Economic History, 70, 25-41. https://doi.org/10.1016/j.eeh.2018.08.002
Ermisch, J, and Smeeding, T.M. (2012). From Parents to Children: The Intergenerational Transmission of Advantage, New York: Russell Sage Foundation.
Fearon, J. D., and Laitin, D. (2003). Ethnicity, insurgency, and civil war. American Political Science Review, 97, 75-90. https://doi.org/10.1017/S0003055403000534
Feenstra, R., Inklaar, R., and Timmer, M. (2015). The next generation of the Penn world table. American Economic Review, 105(10), 3150-3182. https://doi.org/10.1257/aer.20130954
Feierabend, K., and Feierabend, R. (1966). Aggressive behavior within polities. Journal of Conflict Resolution, 10, 249-271. https://doi.org/10.1177/002200276601000301
Furceri, D., and Ostry, J. (2019). Robust determinants of income inequality. Oxford Review of Economic Policy, 35(3), 490-517.
Gurr, R. (1968). A causal model of civil strife: a comparative analysis using new indices. American Political Science Review. 62, 1104-1124. https://doi.org/10.2307/1953907
Haggard, S., and Kaufman, R. (2012). Inequality and regime change: democratic transitions and the stability of democratic rule. American Political Science Review, 106(3), 1-22. https://doi.org/10.1017/S0003055412000287
Hardy, M. (1979). Economic growth, distributional inequality, and political conflict in industrial societies. Journal of Political and Military Sociology, 5, 209-227.
Heckscher, E. (1919). The effect of foreign trade on the distribution of income. A translation is provided by H. Flam and M. J. Flanders, eds., Heckscher-Ohlin Trade Theory (Cambridge, MA: MIT Press, 1991). This article originally appeared in Swedish in Ekonomisk Tidskerift, 21, 497-512.
Heston, A., Summers, R., and Aten, B. (2012). Penn World Table Version 7.1. Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania.
Huber, J. (2002). Deliberate discretion? Japanese Journal of Political Science, 4, 157-159. https://doi.org/10.1017/CBO9780511804915
Huntington, S. (1968). Political Order in Changing Societies. New Haven, CT: Yale Univ. Press.
Kaldor, N. (1957). A model of economic growth. The Economic Journal, 67(268), 591:624. https://doi.org/10.2307/2227704
Karklins, R. (2005). The System Made Me Do It: Corruption in Post-Communist Societies. Armonk, N.Y: M.E. Sharpe.
Knight, J., and. Sabot, R. (1983). Educational Expansion and the Kuznets Effect, American Economic Review. 73 (5), 1132-1136.
Kuznets, S. (1955). Economic growth and income inequality. The American Economic Review, 45(1), 1-28.
Lorenz, O. (1905). Methods of measuring the concentration of wealth. Publications of the American Statistical Association, 9(70), 209-219. https://doi.org/10.1080/15225437.1905.10503443
Lundberg, M., and Squire, L. (2003). The simultaneous evolution of growth and inequality. The Economic Journal, 113(487), 326-344. https://doi.org/10.1111/1468-0297.00127
Milanovic, B. (2016). Global Inequality: A new Approach for the Age of Globalization. Cambridge, MA: Harvard University Press. https://doi.org/10.4159/9780674969797
Nagel, J. (1974). Inequality and discontent: a nonlinear hypothesis. World Politics. 22, 453-472. https://doi.org/10.2307/2010097
Newey, W., and West, K. (1987). A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix. Econometrica, 55, 703-708. https://doi.org/10.2307/1913610
Ohlin, B. (1933). Interregional and International Trade. Cambridge, MA: Harvard University Press.
Olson, M. (1965). The logic of collective action: Public goods and the theory of groups. Cambridge: Harvard University Press.
Parsons, B. (2023). Panel Data Analysis of the Human Capital Index and Income Inequality. Applied Econometric and International Development, 23(1), 5-32.
Plato. Republic. Books I, II, IV and "The Myth of the Cave: From Book VII." Morality and the Good Life: An Introduction to Ethics through the Classical Sources. 5th ed. Eds. Robert C. Solomon, Clancy W. Martin, and Wayne Vaught. Trans. G.M.A. Grube. Boston: McGraw-Hill, 2009. 81-104.
Posner, R. (1997). Equality, wealth, and political stability. Journal of Law, Economics, and Organizations, 13(2), 344-364. https://doi.org/10.1093/oxfordjournals.jleo.a023387
Pugh, M. (2003). Protectorates and spoils of peace: Political economy in South-East Europe. In D. Jung (Ed.), Shadow globalization, ethnic conflicts and new wars. London: Routledge. https://doi.org/10.4324/9780203216965
Sahota, G. (1978). Theories of Personal Income Distribution: A Survey. Journal of Economic Literature, 16(1), 1-55.
Solt, F. (2015). Economic inequality and nonviolent protest. Social Science Quarterly, 96(5), 1314-1327. https://doi.org/10.1111/ssqu.12198
Stiglitz, Joseph. (2013). The price of inequality. New Perspectives Quarterly. 30(1). https://doi.org/10.1111/npqu.11358
Stolper, W., and Samuelson, P. (1941). Protection and real wages. Review of Economic Studies, 9(1), 58-73. https://doi.org/10.2307/2967638
Tocqueville, A. (1835). Democracy-in America, Volume II. New York: Schocken Books.
United Nations Development Program. (2021). Human Development Report 2020. New York: Oxford Press.
Von Schulze-Gaevernitz, G. (1915). Origins of British Supremacy of the Seas. Current History, 3(3), 560-563. https://doi.org/10.1525/curh.1915.3.3.560
Weede, E. (1981). Income inequality, average income, and domestic violence. Journal of Conflict Resolution, 25, 639-653. https://doi.org/10.2307/2600358
Young, A. (2013). Inequality, the urban-rural gap, and migration. Quarterly Journal of Economics, 128(4), 1727-1785. https://doi.org/10.1093/qje/qjt025