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Government Involvement in the Economy and the Distribution of Income: A Cross-National Study

Citation

Boyd, Robert (1988). Government Involvement in the Economy and the Distribution of Income: A Cross-National Study. Population Research and Policy Review, 7, 223-38.

Abstract

This study explores the effect of government involvement in the economy, as measured by central government expenditures as a percent of Gross Domestic Product (GDP), on the distribution of income. It is hypothesized that state spending — in the form of transfer payments to firms and households, government purchases, and military spending — will have a negative influence on income inequality only at high levels of economic development. Multivariate analysis confirms this hypothesis. The results show that government expenditures as a percent of GDP and level of industrialization interact to produce a negative impact on income inequality. This finding, moreover, holds up after additional investigation for possible OLS assumption violations, sample dependence of results, and model misspecification.

URL

https://doi.org/10.1007/BF02456103

Reference Type

Journal Article

Journal Title

Population Research and Policy Review

Author(s)

Boyd, Robert

Year Published

1988

Volume Number

7

Pages

223-38

Reference ID

729