This paper will test the relationship between income inequality and ethnic heterogeneity. Although previous research has used ethno-linguistic fractionalization as a control variable in inequality regressions, no research has focused primarily on an alternative measure of heterogeneity – polarization. Using Gini coefficients from the from the World Income Inequality Database and polarization data from Montalvo and Reynal-Querol (2005b), a pooled OLS regression is run using data from 58 countries with 205 total observations. The results of these regressions suggest that ethnic polarization does have a positive effect on income inequality, even controlling for country characteristics and allowing for regional differences.
Hotard, Michael, "Differences Lead to Differences: Diversity and Income Inequality Across Countries" (2008). Master's Theses - Economics. 13.