Defence and Peace Economics, Vol. 18, No. 6, pp. 2519-535, 2007
Posted: 5 Nov 2011
Date Written: 2007
A substantial body of literature has uncovered a robust relationship between institutions including unionization and political democracy and economic inequality. This paper examines the effect of military spending on inequality, controlling for the size of the armed forces, GDP growth, per capita income, and other possible determinants. Using a panel regression with country level observations from 1987-1997, we obtained consistent estimates that there is a positive effect of military expenditure on pay inequality. This relationship is robust across variable definitions and model specifications. Given the close relationship between pay and income, this result suggests that a country’s increases in military spending could increase income inequality.
Keywords: military spending, inequality
JEL Classification: H56, D30
Suggested Citation: Suggested Citation
Ali, Hamid E., Military Expenditures and Inequality: Empirical Evidence from Global Data (2007). Defence and Peace Economics, Vol. 18, No. 6, pp. 2519-535, 2007. Available at SSRN: https://ssrn.com/abstract=1928823