Inequality and economic and political change: a comparative perspective

This paper describes the evolution of inequality in the world economy since 1963 and describes the relationship between inequality, development, political regimes and the functional distribution of income. The movement of inequality within-countries since 1971 exhibits a strong common pattern across countries, suggesting that changes in the between-sector terms of trade and world interest rates exerted a powerful influence; thus, commodity prices and the global effects of monetary policy appear critical to changing inequality worldwide. We also find that political regimes matter: egalitarian regime types exhibit lower measures of inequality, after controlling for economic variables, region and changes over time.