Income Inequality and Economic Progress

A bstract . The institutionalist approach to income distribution and economic progress is compared to the conventional approaches such as neo classical and neo‐Keynesian schools. A two step causal model reflecting the institutionalist view on the relationship of these two variables is constructed. The empirical results show that the greater the inequality in the distribution of personal incomes, the greater the level of socio‐ political instability , and that the greater the level of socio‐political instability, the slower the economic progress.