Volume and Quality of Infrastructure and the Distribution of Income: An Empirical Investigation

We provide evidence on the link between infrastructure development and the distribution of income for the period 1960–97. We use roads, railways, telecommunications, and energy measures. The approach is comprehensive as individual measures and composite indices are used. Cross‐country and panel regressions are applied. In the latter, we apply GMM dynamic methods to minimize for endogeneity problems. We find that both quantity and quality of infrastructure are negatively linked with income inequality. The quantitative link tends to be stronger in developing countries than the qualitative link. These findings hold when using different econometric methods and most infrastructure measures.