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Effects of political rivalry on public educational investments and income inequality: evidence from empirical data

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  • Elena Sochirca

    ()
    (CEF.UP and FEP, Universidade do Porto)

  • Óscar Afonso

    ()
    (CEF.UP and FEP, Universidade do Porto)

  • Sandra Silva

    ()
    (CEF.UP and FEP, Universidade do Porto)

Abstract

In this paper we intend to empirically examine how different political institutions may define the long-term economic development, determined by educational investments and income inequality. With this objective, we assess the impact of political rivalry on four selected macroeconomic variables: public investments in education, individual learning choice, GDP per capita and income inequality, motivated by previous theoretical results. We first construct a composite political rivalry indicator and examine how it varies across different groups of countries. Then, using cross-sectional data, we perform a series of regressions for examining political rivalry effects on the selected variables. Our empirical findings indicate that in lower income countries there is indeed a significant negative impact of political rivalry, which increases with the decrease in the development level. The same is not confirmed for higher-income countries, which may suggest that the relationship between political rivalry and the examined variables may, in fact, be weaker in these countries, or that relevant mechanisms may differ with the level of development.

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Bibliographic Info

Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series CEF.UP Working Papers with number 1304.

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Length: 38 pages
Date of creation: Feb 2013
Date of revision:
Handle: RePEc:por:cetedp:1304

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Keywords: economic development; human capital accumulation; inequality; institutions; political rivalry; public education.;

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  1. Barro, Robert J, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 407-43, May.
  2. Oded Galor & Omer Moav, 1999. "From Physical to Human Capital Accumulation: Inequality in the Process of Development," Working Papers 99-27, Brown University, Department of Economics.
  3. Daron Acemoglu & Simon Johnson, 2005. "Unbundling Institutions," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 949-995, October.
  4. Elena Sochirca & Oscar Afonso & Sandra Silva, 2012. "Political rivalry effects on human capital accumulation and inequality: a New Political Economy approach," FEP Working Papers 466, Universidade do Porto, Faculdade de Economia do Porto.
  5. Sayer, Stuart, 2000. " Issues in New Political Economy: An Overview," Journal of Economic Surveys, Wiley Blackwell, vol. 14(5), pages 513-26, December.
  6. Paul, Gilles Saint & Verdier, Thierry, 1996. "Inequality, redistribution and growth: A challenge to the conventional political economy approach," European Economic Review, Elsevier, vol. 40(3-5), pages 719-728, April.
  7. Sylwester, Kevin, 2000. "Income inequality, education expenditures, and growth," Journal of Development Economics, Elsevier, vol. 63(2), pages 379-398, December.
  8. Bourguignon, Francois & Morrisson, Christian, 1998. "Inequality and development: the role of dualism," Journal of Development Economics, Elsevier, vol. 57(2), pages 233-257.
  9. Easterly, William, 2007. "Inequality does cause underdevelopment: Insights from a new instrument," Journal of Development Economics, Elsevier, vol. 84(2), pages 755-776, November.
  10. Persson, Torsten & Tabellini, Guido, 1992. "Growth, distribution and politics," European Economic Review, Elsevier, vol. 36(2-3), pages 593-602, April.
  11. Avinash Dixit & Gene M. Grossman & Faruk Gul, 2000. "The Dynamics of Political Compromise," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 531-568, June.
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