Military Expenditures and Inequality: Empirical Evidence from Global Data

Defence and Peace Economics, Vol. 18, No. 6, pp. 2519-535, 2007

Posted: 5 Nov 2011  

Hamid E. Ali

American University in Cairo - School of Global Affairs and Public Policy

Date Written: 2007

Abstract

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

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

Hamid E. Ali (Contact Author)

American University in Cairo - School of Global Affairs and Public Policy ( email )

School of Global Affairs and Public Policy
New Cairo
Egypt

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