Inequality and development: the role of dualism

This paper suggests major factors in country differences in income distribu tion largely overlooked in the literature on inequality and development. Th ey concern the extent of economic dualism, as proxied macroeconomically by the relative labour productivity of non-agricultural sectors vs. agricultur e and related variables. The result is robust with respect to both the comp osition of the sample, the observation period and inclusion of country fixe d effects, in marked contrast to what happens when the analysis is limited to more traditional variables, like GDP per capita or average level of scho oling. (C) 1998 Elsevier Science B.V. All rights reserved. JEL classificati on: D31; 015.