How Does Democracy fare with Economic Welfare for a Trading Nation?
AbstractThe paper examines how political institutions in comparison to legal, social and economic institutions fare with different measures of inequality in a cross section framework. The empirical analysis suggests that countries which practice democracy are less prone to unequal outcomes especially when it comes to wage inequality and income inequality whereas autocracy is associated with higher level of wage inequalities but its impact on income inequalities are insignificant. Though under good economic management, even autocracies may redistribute incomes from the richest to the poorest, more generally an autocratic set up violates the median voter hypothesis. The results also show that political stability is more sensitive to inequalities than democracy and autocracy which is to say that the countries which are internally politically stable also form more equal societies.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 10433.
Date of creation: Jun 2008
Date of revision:
Institutions; Trade Liberalisation; Redistribution; Wage Inequality;
Find related papers by JEL classification:
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- F15 - International Economics - - Trade - - - Economic Integration
- P3 - Economic Systems - - Socialist Institutions and Their Transitions
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