Investigating the mechanisms of the effect of unequal distribution of income on economic development: A Longitudinal Study (1990-2014)

This study seeks to examine the mechanisms that influence the unequal distribution of income structure on the industrial development of societies. This study has been conducted with a comparative-longitudinal method in which data from 189 countries in the period of 1990-2014 (period of 25 years) has been used. Due to the data structure , data analysis was performed using the generalized estimator equations method. The results showed that inequality of income through the social instability plays a diminishing effect on the industrial development of societies. Also, income inequality from the channel of reducing investment in education and thus reducing the level of human capital has a reverse effect on industrial development. Based on the mechanism of the political economy of redistribution, income inequality leads to the redistribution of income through tax policies and thereby affects the industrial development of societies. The findings also showed that income inequality does not directly correlate with the industrial development of societies and it is only through the above mechanisms that influence industrial development.