Subfactors of Rule of Law and Income Inequality: A Panel Data Approach in High Income Countries
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Rule of Law Subfactors, Income Inequality, High Income CountriesAbstract
The relationship between the rule of law, income inequality, and power has been widely discussed over the past century. The balance between the rule of law and income inequality is crucial to the fabric of society, yet this relationship has rarely been considered. This study aims to provide a quantitative analysis of how the rule of law is related to inequalities in per capita income and how this affects the welfare of a nation and individuals. This will be achieved by integrating the field of economic law with political science. Focusing on wealthy countries, we use panel data methodology to analyze the impact of different sub-factors of the rule of law on income distribution. Using data from 31 high-income countries between 2012 and 2021, the study assesses the income distribution of the bottom 50% of the population and investigates whether government constraints, absence of corruption, open government, fundamental rights, civil justice, and criminal justice are associated with the lowest income distribution. The results indicate that the enforcement of economic rules and the judicial system have a significant impact on income distribution. This underscores the need for well-structured legal frameworks that promote fair and inclusive economic outcomes.
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