Roots of Inequality

Abstract:

Why does inequality vary across societies? Why are some societies more unequal than others? We advance the hypothesis that in a market economy, where income differentials reflect variations in productive traits, a significant share of cross-societal differences in inequality may reflect enduring variation in the degree of diversity within societies, rooted in the prehistoric Out-of-Africa migration. Patterns of inequality within the U.S. population are consistent with this hypothesis, suggesting that disparities among groups originating from different ancestral societies are associated with the degree of diversity in productive traits within those societies, shaped during humanity’s dispersal from Africa. Consistent with the proposed mechanism, populations whose ancestors originated closer to East Africa tend to exhibit greater dispersion in productive traits—education, ability, and labor supply—channels that appear to mediate the relationship between ancestral diversity and inequality.