Institutions and Inequality

Abstract: The paper “Social divisions and institutions: Considering cross-country institutional parameter heterogeneity” investigates the hypothesis that the association between property rights institutions and economic performance is weaker in countries with high social divisions, as measured in terms of ethnic fractionalisation and income inequality. The results of the empirical estimations support this hypothesis and indicate that it could have some relevance for explaining identified regional variation in the institutional parameter. Moreover, they point to the importance of carefully evaluating the extent to which the institutions measure used captures the institutional framework applying for a broad cross-section of the population. The paper “Preferences for redistribution - A country comparison of fairness judgements” seeks to explain within- and between-country variation in redistributive preferences in terms of self-interest concerns and an input-based concept of fairness, which we examine by looking at the effects of beliefs regarding the causes of income differences. Results of estimations based on data for the US, Sweden, Germany and Hungary indicate that both factors are indeed important determinants of general redistribution support, in line with hypothesised patterns. Furthermore, it is found that not only do beliefs about causes of income differ widely between countries, but also the effects of these beliefs, suggesting considerable heterogeneity across societies in what is considered as fair.