Inequality and development: the role of dualism

This paper suggests major factors in country differences in income distribution largely overlooked in the literature on inequality and development. They concern the extent of economic dualism, as proxied macroeconomically by the relative labour productivity of non-agricultural sectors vs. agriculture and related variables. The result is robust with respect to both the composition of the sample, the observation period and inclusion of country fixed effects, in marked contrast to what happens when the analysis is limited to more traditional variables, like GDP per capita or average level of schooling.