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The creation of effective states in the OECD since 1870: the role of inequality

Madsen, JB, Wang, Cong ORCID: 0000-0002-6852-5490 and Steiner, B 2017 , 'The creation of effective states in the OECD since 1870: the role of inequality' , European Journal of Political Economy, vol. 50 , pp. 106-121 , doi:

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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.

Item Type: Article
Authors/Creators:Madsen, JB and Wang, Cong and Steiner, B
Keywords: inequality, institutions, state capacity, OECD countries
Journal or Publication Title: European Journal of Political Economy
Publisher: Elsevier BV
ISSN: 0176-2680
DOI / ID Number:
Copyright Information:

Copyright 2017 Elsevier B.V.

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