Military Expenditures and Income Inequality Evidence from a Panel of Transition Countries (1990-2015)

• Published in: Defence and peace economics Vol. 32; no. 1; pp. 46 - 67
• Main Authors: Biscione, Antonella, Caruso, Raul
• Format: Journal Article
• Language: English
• Published: Switzerland Routledge 02.01.2021; Taylor & Francis LLC
• Subjects: Crowding; Defense spending; Expenditures; Health care expenditures; Income; Income inequality; Linearity; Military; Military draft; Military expenditures; political regime; Robustness; Subsidies; Transition economies
• ISSN: 1024-2694; 1476-8267
• DOI: 10.1080/10242694.2019.1661218

This paper contributes to the literature on military spending by analyzing the relationship between military spending and income inequality in a panel of transition economies over the period 1990-2015. In particular, we exploit three different measures of military expenditures: (i) military spending in absolute terms; (ii) military expenditures per capita; (iii) military burden, namely the ratio between military expenditure and GDP. Findings highlight a positive relationship between military expenditures and income inequality captured by means of three different measures of inequality. Results are also confirmed after we performed a variety of robustness tests. Other results are worth noting and somehow puzzling. For example, military conscription appears to have a redistributional effect and when considering a non-linearity the results show that there could be a concave relationship between military spending and income inequality. In addition, when testing for the 'crowding-out argument' results show that expenditures for subsidies are negatively influenced by military spending so confirming the crowding-out argument but there is no significant evidence when considering education and health expenditures.