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Income, Democracy, and Critical Junctures

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  • Cervellati, Matteo

    ()
    (University of Bologna)

  • Jung, Florian

    ()
    (University of St. Gallen)

  • Sunde, Uwe

    ()
    (University of Munich)

  • Vischer, Thomas

    ()
    (University of Munich)

Abstract

Acemoglu, Johnson, Robinson, and Yared (2008) document that the cross-country correlation between income per capita and democracy disappears once including country fixed effects. This paper tests the hypothesis that the effect of income on democracy might differ systematically across countries. A replication of the estimation in a less restrictive empirical framework provides evidence for significant but heterogeneous effects of income on democracy for former colonies and non-colonies, as well as within the sample of former colonies. These heterogeneous effects are related to colonial history and early institutions, and are robust to the use of alternative data and estimation techniques.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7069.

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Length: 43 pages
Date of creation: Dec 2012
Date of revision:
Handle: RePEc:iza:izadps:dp7069

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Keywords: critical junctures; democracy; economic development; income; institutions; modernization hypothesis;

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References

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  1. Graziella Bertocchi & Andrea Guerzoni, 2010. "Growth, History, or Institutions? What Explains State Fragility in Sub-Saharan Africa," Center for Economic Research (RECent) 044, University of Modena and Reggio E., Dept. of Economics.
  2. Quamrul Ashraf & Oded Galor, 2011. "Dynamics and Stagnation in the Malthusian Epoch," NBER Working Papers 17037, National Bureau of Economic Research, Inc.
  3. Jess Benhabib & Alejandro Corvalan & Mark M. Spiegel, 2011. "Reestablishing the income-democracy nexus," Working Paper Series 2011-09, Federal Reserve Bank of San Francisco.
  4. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  5. repec:cup:cbooks:9780521855266 is not listed on IDEAS
  6. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
  7. Giovanni S. F. Bruno, 2005. "Estimation and inference in dynamic unbalanced panel-data models with a small number of individuals," Stata Journal, StataCorp LP, vol. 5(4), pages 473-500, December.
  8. José Cheibub & Jennifer Gandhi & James Vreeland, 2010. "Democracy and dictatorship revisited," Public Choice, Springer, vol. 143(1), pages 67-101, April.
  9. Barro, Robert J., 1999. "Determinants of Democracy," Scholarly Articles 3451297, Harvard University Department of Economics.
  10. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, 02.
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Cited by:
  1. Matteo Cervellati & Florian Jung & Uwe Sunde & Thomas Vischer, 2014. "Income and Democracy: Comment," American Economic Review, American Economic Association, vol. 104(2), pages 707-19, February.

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