Polarization, Politics and Property Rights: Links between Inequality and Growth

In: Public choice, Band 111, Heft 1-2, S. 127-154

Abstract

We argue that social polarization reduces the security of property & contract rights &, through this channel, reduces growth. The first hypothesis is supported by cross-country evidence indicating that polarization in the form of income inequality, land inequality, & ethnic tensions is inversely related to a commonly used index of the security of contractual & property rights. When the security of property rights is controlled for in cross-country growth regressions, the relationship between inequality & growth diminishes considerably. This & other evidence provides support for our second hypothesis, that inequality reduces growth in part through its effect on the security of property rights. 3 Tables, 1 Appendix, 48 References. Adapted from the source document.