Working Paper

The effect of foreign aid on income inequality: Evidence from panel cointegration


  • Herzer
  • D.
  • Nunnenkamp
  • P.
Publication Date

This paper examines the long-run effect of foreign aid on income inequality for 21 recipient countries using panel cointegration techniques to control for omitted variable and endogeneity bias. We find that aid exerts an inequality increasing effect on income distribution.


JEL Classification
D31, F35, C23

Key Words

  • cointegration
  • foreign aid
  • inequality
  • Panel data
  • Ungleichheit