We consider the empirical relevance of two opposing hypotheses on the causality between income and democracy: The Democratic Transition claims that rising incomes cause a transi¬tion to democracy, whereas the Critical Junctures hypothesis denies this causal relation. Our empirical strategy is justified by Unified Growth Theory, which hypothe¬sizes that the present international income differences have roots in the prehistoric past. Thus, we use prehistoric measures of biogeography as instruments for modern income levels, and find a large long-run causal effect of income on the degree of democracy. This result rejects the Critical Junctures hypothesis, which is an important part of the Primacy of Institutions view
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number
1410.
Find related papers by JEL classification: B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian O1 - Economic Development, Technological Change, and Growth - - Economic Development
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Acemoglu, Daron & Johnson, Simon & Robinson, James A & Yared, Pierre, 2005.
"Income and Democracy,"
CEPR Discussion Papers
5273, C.E.P.R. Discussion Papers.
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Daron Acemoglu & Simon Johnson & James Robinson & Pierre Yared, 2005.
"Income and Democracy,"
NBER Working Papers
11205, National Bureau of Economic Research, Inc.
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Daron Acemoglu & Simon Johnson & James A. Robinson & Pierre Yared, 2008.
"Income and Democracy,"
American Economic Review,
American Economic Association, vol. 98(3), pages 808-42, June.
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