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Does Liberté = Egalité? A Survey of the Empirical Evidence on the Links between Political Democracy and Income Inequality

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  • Mark Gradstein
  • Branko Milanovic

Abstract

The relationship between the distribution of political rights and that of economic resources has been studied both theoretically and empirically. This paper reviews the existing literature and, in particular, the available empirical evidence.Our reading of the literature suggests that formal exclusion from the political process through restrictions on voting franchise appears to have caused a high degree of economic inequality, and democratization in the form of franchise expansion has typically led to an expansion in redistribution, at least in the small sample of episodes studied. Similarly, and more emphatically compared to the ambiguous results of the earlier research, more recent evidence indicates an inverse relationship between other measures of democracy, based on civil liberties and political rights, and inequality. The transition experience of the East European countries, however, seems to some extent to go against these conclusions. This, in turn, opens possible new vistas for research, namely the need to incorporate the length of democratic experience and the role played by ideology and social values.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 261.

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Date of creation: 2000
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Handle: RePEc:ces:ceswps:_261

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Keywords: Democracy; freedom; inequality; redistribution;

References

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  1. Daron Acemoglu & James A. Robinson, 2000. "Why Did The West Extend The Franchise? Democracy, Inequality, And Growth In Historical Perspective," The Quarterly Journal of Economics, MIT Press, vol. 115(4), pages 1167-1199, November.
  2. Saint-Paul, G. & Verdier, T., 1991. "Education, Democracy and growth," DELTA Working Papers 91-27, DELTA (Ecole normale supérieure).
  3. Milanovic, Branko, 1999. "Do more unequal countries redistribute more? does the median voter hypothesis hold?," Policy Research Working Paper Series 2264, The World Bank.
  4. Bassett, William F. & Burkett, John P. & Putterman, Louis, 1999. "Income distribution, government transfers, and the problem of unequal influence," European Journal of Political Economy, Elsevier, vol. 15(2), pages 207-228, June.
  5. Alesina, Alberto & Perotti, Roberto, 1994. "The Political Economy of Growth: A Critical Survey of the Recent Literature," World Bank Economic Review, World Bank Group, vol. 8(3), pages 351-71, September.
  6. Daron Acemoglu & James A. Robinson, 2001. "A Theory of Political Transitions," American Economic Review, American Economic Association, vol. 91(4), pages 938-963, September.
  7. Dani Rodrik, 1998. "Democracies Pay Higher Wages," NBER Working Papers 6364, National Bureau of Economic Research, Inc.
  8. Alberto Alesina & Dani Rodrik, 1991. "Distributive Politics and Economic Growth," NBER Working Papers 3668, National Bureau of Economic Research, Inc.
  9. Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999. "A Data Set on Income Distribution," CEMA Working Papers 575, China Economics and Management Academy, Central University of Finance and Economics.
  10. Atkinson,Anthony Barnes & Micklewright,John, 1992. "Economic Transformation in Eastern Europe and the Distribution of Income," Cambridge Books, Cambridge University Press, number 9780521433297, April.
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  12. Li, Hongyi & Squire, Lyn & Zou, Heng-fu, 1998. "Explaining International and Intertemporal Variations in Income Inequality," Economic Journal, Royal Economic Society, vol. 108(446), pages 26-43, January.
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  14. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
  15. Persson, T. & Tabellini, G., 1993. "Is Inequality Harmful for Growth," Papers 537, Stockholm - International Economic Studies.
  16. L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
  17. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August.
  18. John R. Lott & Jr. & Lawrence W. Kenny, 1999. "Did Women's Suffrage Change the Size and Scope of Government?," Journal of Political Economy, University of Chicago Press, vol. 107(6), pages 1163-1198, December.
  19. Husted, Thomas A & Kenny, Lawrence W, 1997. "The Effect of the Expansion of the Voting Franchise on the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 54-82, February.
  20. John F. Helliwell, 1992. "Empirical Linkages Between Democracy and Economic Growth," NBER Working Papers 4066, National Bureau of Economic Research, Inc.
  21. Redor,Dominique, 2010. "Wage Inequalities in East and West," Cambridge Books, Cambridge University Press, number 9780521134149, April.
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  23. Gouveia, Miguel & Masia, Neal A, 1998. " Does the Median Voter Model Explain the Size of Government?: Evidence from the States," Public Choice, Springer, vol. 97(1-2), pages 159-77, October.
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Citations

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Cited by:
  1. Alberto Chong, 2001. "Inequality, Democracy, and Persistence: Is There a Political Kuznets Curve?," Research Department Publications 4253, Inter-American Development Bank, Research Department.
  2. Polterovich, Victor & Popov, Vladimir, 2007. "Democratization, Quality of Institutions and Economic Growth," MPRA Paper 19152, University Library of Munich, Germany.
  3. Polterovich, Victor & Popov, Vladimir & Tonis, Alexander, 2009. "Концентрация Доходов, Нестабильность Демократии И Экономический Рост
    [Income Concentration, Instability of Democracy and the Economic Gr
    ," MPRA Paper 27561, University Library of Munich, Germany.
  4. Daniele Checchi, 2000. "Does educational achievement help to explain income inequality?," Departmental Working Papers 2000-11, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  5. Polterovich, Victor & Popov, Vladimir, 2007. "Демократизация И Экономический Рост
    [Democratization and Economic Growth]
    ," MPRA Paper 23012, University Library of Munich, Germany.
  6. Amir-ud-Din, Rafi & Rashid, Abdul & Ahmad, Shabbir, 2008. "Democracy, Inequality and Economic Development: The Case of Pakistan," MPRA Paper 26935, University Library of Munich, Germany.
  7. David Henderson & Robert M McNab & Tamas Rozsas, 2004. "The Hidden Inequality In Socialism," Development and Comp Systems 0411012, EconWPA.
  8. Achim Kemmerling, 2003. "Regional Input on the Social Dimension of Ezoneplus: Belgium, The Netherlands, France, Austria, and Germany," Eastward Enlargement of the Euro-zone Working Papers wp13c, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Mar 2003.
  9. Alberto Chong, 2001. "Desigualdad, democracia y persistencia: ¿existe una curva Kuznets política?," Research Department Publications 4254, Inter-American Development Bank, Research Department.

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