The creation of effective states in the OECD since 1870: The role of inequality |
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| Affiliation: | 1. Vienna University of Economics and Business, Department of Economics, Welthandelsplatz 1, A-1020 Vienna, Austria;2. Austrian Institute of Economic Research (WIFO), Arsenal, Objekt 20, A-1030 Vienna, Austria;3. University of Vienna, Department of Economic Sociology, Oskar Morgenstern Platz 1, A-1090 Vienna, Austria;1. Comisión Federal para la Protección contra Riesgos Sanitarios (COFEPRIS), Monterrey 33, Colonia Roma, Delegación Cuauhtémoc, México City 06700, Mexico;2. Claremont Graduate University, Division of Politics and Economics, School of Social Science, Policy and Evaluation, 150 East Tenth Street, Claremont, CA 91711, United States |
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| Abstract: | Research shows that state capacity is crucial for economic development, yet the impact of inequality on state capacity is not well understood. This paper examines the impact of income inequality on three key dimensions of state capacity, namely legal, fiscal and collective capacity using annual data for a core of 21 OECD countries over the period 1870–2013. We find that the marked reduction in inequality over most of the last century starting from 1916 was pivotal to the significant improvements in legal, fiscal and collective capacity in the OECD countries over the same period. |
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| Keywords: | Inequality Institutions State capacity OECD countries |
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