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Democratization and inequality: Empirical evidence for the Organisation for Economic Co-operation and Development member countries

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  • Sebastian Ille
  • Adrian Risso
  • Edgar J Sanchez Carrera

Abstract

The correlation between democracy and income inequality, as well as the direction of causation is still debated. In this paper, we conduct a dynamic panel data analysis for all 34 Organisation for Economic Co-operation and Development member states over the period 1960–2012 and illustrate a nonmonotonic relationship between inequality and democracy, as well as test the direction of causation by employing a noncausal homogeneity test in a panel Granger framework and the Dumitrescu and Hurlin noncausal heterogeneity test. We provide an explanation for the inverted U-shaped relation. In addition, we illustrate individual regression results for 12 exemplary Organisation for Economic Co-operation and Development countries and provide a concise illustration of the economic and political changes to which countries have been subjected while elaborating the effect of the underlying policies on democracy and income equality.

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  • Sebastian Ille & Adrian Risso & Edgar J Sanchez Carrera, 2017. "Democratization and inequality: Empirical evidence for the Organisation for Economic Co-operation and Development member countries," Environment and Planning C, , vol. 35(6), pages 1098-1116, September.
    • Handle: RePEc:sae:envirc:v:35:y:2017:i:6:p:1098-1116
    DOI: 10.1177/0263774X16684521
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    Cited by:

    1. Giorgio Calcagnini & Edgar J. Sanchez Carrera & Rosalba Rombaldoni, 2019. "EClustering Democracy and Inequality," Working Papers 1906, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2019.
    2. Chelsea Murray & Robert Graham Clark & Silvia Mendolia & Peter Siminski, 2018. "Direct Measures of Intergenerational Income Mobility for Australia," The Economic Record, The Economic Society of Australia, vol. 94(307), pages 445-468, December.
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    4. Laura Policardo & Edgar J. Sanchez Carrera, 2020. "Can income inequality promote democratization?," Metroeconomica, Wiley Blackwell, vol. 71(3), pages 510-532, July.

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