Open AccessDo Economic Complexity and Strong Institutions Affect Income Inequality
Author(s) -
Rudy Hendra Prasetiya
Publication year - 2021
Publication title -
jurnal perencanaan pembangunan/jurnal perencanaan pembangunan
Language(s) - English
Resource type - Journals
eISSN - 2654-2625
pISSN - 2598-0807
DOI - 10.36574/jpp.v5i3.213
Subject(s) - endogeneity , economic inequality , economics , inequality , generalized method of moments , government (linguistics) , ordinary least squares , rule of law , affect (linguistics) , politics , stability (learning theory) , political stability , econometrics , panel data , political science , mathematics , sociology , linguistics , philosophy , communication , machine learning , mathematical analysis , computer science , law
This study investigates the relationship of a country's sophisticated products and institutional indicators on income inequality. Cross-country OLS and fixed-effects estimate regression analysis show that countries with productive economic structures have less inequality. Meanwhile, three government indicators in accountability, political stability, and the rule of law show mixed results. Using the system generalized method of moments (GMM) to control endogeneity, we find evidence of a causal link from economic complexity to income inequality in the short run. Meanwhile, the government's political stability is not a significant predictor.