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Inequality and Economic and Political Change: A Comparative Perspective

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This paper describes the broad evolution of inequality in the world economy over the past four decades, and provides a summary account of the relationship between inequality, economic development, political regimes and the functional distribution of income.

A central finding is that the movement of inequality within-countries since 1971 exhibits a strong common pattern across countries, suggesting that changes in the global terms of trade between sectors and especially creditor-debtor relationships have powerfully influenced the movement of inequality almost everywhere. We also find evidence that political regimes matter: ideologically egalitarian regime types do exhibit lower measures of inequality, after controlling for economic variables, for region and for changes over time. The evidence on inequality comes from a series of data sets built by the University of Texas Inequality Project; that on the related factors is developed in background papers referenced below and available on the UTIP web-site at http://utip.gov.utexas.edu .