Abstract

Against a backdrop of financialisation, extreme inequality and evolving financial instability, this paper’s primary contribution is to analyse the determinants of personal income inequality within one of the world’s most prominent emerging economies. We pay particular attention to the magnitude, significance and scale of the determinants in a financialisation context, from which this paper’s relative contributions emerge. Our empirical strategy utilises modern panel data techniques and different instrumental variables approaches for robustness. This paper’s analysis provides a first step in the direction of identifying the main mechanisms through which financial liberalisation has affected income inequality at the sub-national scale; while providing an early indication of how inequality might evolve in the future.