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Inequality, Democracy, and Persistence: Is There a Political Kuznets Curve?

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  • Alberto Chong

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Abstract

The aim of this paper is to provide comprehensive empirical evidence on recent theories that link democracy and income inequality for the period 1960-1995. In simple cross-country regressions I find a non-monotonic link between these two variables when using ordinary least squares, instrumental variables, and Eusufzai tests. Since these results cannot be taken as "true" time series findings, even though recent theories that explain such a link are, I also employ recent methods applied to dynamic models on panel data. These techniques allow accounting for potential simultaneity and heterogeneity problems. Using the preferred econometric methodology, I also find support for the existence of a political Kuznets curve. Moreover, it appears that income inequality is unconditionally persistent. Results hold for two different democracy proxies and when sensitivity analysis is applied.

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Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4253.

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Date of creation: Apr 2001
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Handle: RePEc:idb:wpaper:4253

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  1. Mark Gradstein & Branko Milanovic, 2000. "Does Liberté = Egalité? A Survey of the Empirical Evidence on the Links between Political Democracy and Income Inequality," CESifo Working Paper Series 261, CESifo Group Munich.
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  6. Alberto Chong & Luisa Zanforlin, 2001. "Technological adaptation, trade, and growth," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 137(4), pages 565-592, December.
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Citations

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Cited by:
  1. Alberto Chong & Luisa Zanforlin, 2001. "Inward-Looking Policies, Institutions, Autocrats, and Economic Growth in Latin America: An Empirical Exploration," Research Department Publications 4255, Inter-American Development Bank, Research Department.
  2. Nohra Rey de Marulanda & Julio Guzmán, 2003. "Inequidad, desarrollo humano y política social: Importancia de las "Condiciones Iniciales"," IDB Publications 10598, Inter-American Development Bank.
  3. Carlyn Dobson & Antonio Rodríguez, 2010. "Is Corruption Really Bad for Inequality? Evidence from Latin America," Development Research Working Paper Series 02/2010, Institute for Advanced Development Studies.
  4. Gianmarco León & Valerie Koechlin, 2006. "International Remittances and Income Inequality: An Empirical Investigation," IDB Publications 6716, Inter-American Development Bank.
  5. Unal Tongur & Adem Yavuz Elveren, 2012. "Military Expenditures, Inequality, and Welfare and Political Regimes: A Dynamic Panel Data Analysis," ERC Working Papers 1210, ERC - Economic Research Center, Middle East Technical University, revised Dec 2012.
  6. Alberto Chong & Mauricio Olivera, 2005. "Votación obligatoria y desigualdad del ingreso en una muestra representativa de países," Research Department Publications 4414, Inter-American Development Bank, Research Department.
  7. Alberto Chong & Mauricio Olivera, 2005. "On Compulsory Voting and Income Inequality in a Cross-Section of Countries," Research Department Publications 4413, Inter-American Development Bank, Research Department.
  8. Bergh, Andreas & Bjørnskov, Christian, 2013. "Trust, Welfare States and Income Equality: What Causes What?," Working Paper Series 994, Research Institute of Industrial Economics.
  9. Christian Bjørnskov & Jacob Mchangama, 2013. "Do Social Rights Affect Social Outcomes?," Economics Working Papers 2013-18, School of Economics and Management, University of Aarhus.
  10. Bjørnskov, Christian, 2010. "Do elites benefit from democracy and foreign aid in developing countries?," Journal of Development Economics, Elsevier, vol. 92(2), pages 115-124, July.
  11. Alberto Chong & Luisa Zanforlin, 2001. "Políticas de orientación interna, instituciones, autócratas y crecimiento económico en América Latina: un análisis empírico," Research Department Publications 4256, Inter-American Development Bank, Research Department.

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