Scandinavian Working Papers in Economics
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Department of Economics, Aarhus School of Business, University of Aarhus Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus

No 04-8:
Inequality, Tolerance, and Growth

Christian Bjørnskov ()

Abstract: This paper argues for the importance of individuals’ tolerance of inequality for

economic growth. By using the political ideology of governments as a measure of

revealed tolerance of inequality, the paper shows that controlling for ideology improves

the accuracy with which the effects of inequality are measured. Results show that

inequality reduces growth but more so in societies where people perceive it as being

relatively unfair. Further results indicate that legal quality and social trust are likely

transmission channels for the effects of inequality.

Keywords: Inequality; Growth; Social Capital and Social Norms; (follow links to similar papers)

JEL-Codes: D63; O40; Z13; (follow links to similar papers)

34 pages, May 27, 2004

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