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Kiel Institute for World Economics Kiel Working Papers, Kiel Institute for World Economics

No 1762:
The Effect of Foreign Aid on Income Inequality: Evidence from Panel Cointegration

Peter Nunnenkamp Dierk Herzer

Abstract: This paper examines the long-run effect of foreign aid on income inequality for 21 recipient countries using panel cointegration techniques to control for omitted variable and endogeneity bias. We find that aid exerts an inequality increasing effect on income distribution

Keywords: Inequality, foreign aid, panel data, cointegration; (follow links to similar papers)

JEL-Codes: D31,; F35,; C23; (follow links to similar papers)

31 pages, March 2012

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