TY  - JOUR
AU  - Alesina,Alberto
AU  - Perotti,Roberto
TI  - Income Distribution, Political Instability, and Investment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4486
PY  - 1993
Y2  - October 1993
UR  - http://www.nber.org/papers/w4486
L1  - http://www.nber.org/papers/w4486.pdf
N1  - Author contact info:
Alberto F. Alesina
Department of Economics
Harvard University
Littauer Center 210
Cambridge, MA 02138
Tel: 617/495-8388
Fax: 617/495-7730
E-Mail: aalesina@harvard.edu

Roberto Perotti
IGIER Universita' Bocconi
Via Roentgen 1
20136 Milano
ITALY
Tel: 39 02 58363073
Fax: 39 02 58363302
E-Mail: roberto.perotti@unibocconi.it
M2  - featured in NBER digest on 1994-04-01
AB  - This paper successfully tests on a sample of 70 countries for the period 1960-85 the following hypotheses.  Income inequality, by fueling social discontent, increases socio-political instability.  The latter, by creating uncertainty in the politico-economic environment, reduces investment.  As a consequence, income inequality and investment are inversely related.  Since investment is a primary engine of growth, this paper identifies a channel for an inverse relationship between income inequality and growth. We measure socio-political instability with indices which capture the occurrence of more or less violent phenomena of political unrest and we test our hypotheses by estimating a two-equation model in which the endogenous variables are investment and an index of socio-political instability. Our results are robust to sensitivity analysis on the specification of the model and the measure of political instability, and are unchanged when the model is estimated using robust regression techniques.
ER  -