Özet:

The relationship between the protection of property rights and income inequality in OECD countries for the period 1996-2020 is the subject of analysis of this paper. As an indicator of income inequality, two different variables are used: the Gini coefficient and the national income share of the top 1%. To control endogeneity, instrumental variables are also included in the model in addition to the indicator for the protection of property rights. In the two different models estimated with the ¨augmented mean group (AMG)¨ estimator from heterogeneous panel data models, results have been obtained that support approaches that argue that the protection of property rights reduces income inequality by creating a favourable institutional environment for all segments of society in OECD countries. In other words, empirical findings reveal that the protection of property rights reduces income inequality in the long run. However, the individual country parameters in the models estimated with the AMG estimator, which allows for the heterogeneity of the slope, show that the protection of property rights increases income inequality in some countries. The results of the panel data analysis present the strengthening of the property rights institution as a policy recommendation due to its reducing effect on the income inequality. However, the heterogeneity of country parameters presents the necessity of more detailed analyses of the channels that distort or improve the income distribution by examining country-specific factors and other institutional elements.

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