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Income and Democracy: Revisiting the Evidence

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  • Enrique Moral-Benito
  • Cristian Bartolucci

Abstract

It is well-known in the literature that income per capita is strongly correlated with the level of democracy across countries. In an influential paper, Acemoglu et al. (2008) find that this linear correlation disappears once they control for country-specific effects focusing on within-country variation. In this paper we find evidence of a non-linear effect from income to democracy even after controlling for country-specific effects. While a positive effect emerges for poor countries, this effect vanishes for rich countries.

Suggested Citation

  • Enrique Moral-Benito & Cristian Bartolucci, 2011. "Income and Democracy: Revisiting the Evidence," Carlo Alberto Notebooks 204, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:204
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    Cited by:

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    2. Alberto Batinti & Joan Costa‐Font & Timothy J. Hatton, 2022. "Voting Up? The Effects of Democracy and Franchise Extension on Human Stature," Economica, London School of Economics and Political Science, vol. 89(353), pages 161-190, January.
    3. Fahad Hassan Khan, 2014. "From revenues to democracy?," Departmental Working Papers 2014-25, The Australian National University, Arndt-Corden Department of Economics.
    4. Tian, Jilin & Sim, Nicholas & Yan, Wenshou & Li, Yanyun, 2020. "Trade uncertainty, income, and democracy," Economic Modelling, Elsevier, vol. 90(C), pages 21-31.
    5. Rabia Efeoglu & Sabri Azgun, 2022. "The Effect of Industrial, Financial, Technological and Environmental Development Indicators on the Democracy Level in Emerging Economies," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 47(2), pages 1-19.
    6. Saha, Shrabani & Zhang, Zhaoyong, 2017. "Democracy-growth nexus and its interaction effect on human development: A cross-national analysis," Economic Modelling, Elsevier, vol. 63(C), pages 304-310.
    7. Wadjamsse B. Djezou, 2014. "The Democracy and Economic Growth Nexus: Empirical Evidence from Côte d’Ivoire," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 11(2), pages 251-266, December.
    8. Rainer Kotschy & Uwe Sunde, 2021. "Income Shocks, Inequality, and Democracy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(1), pages 295-326, January.
    9. Kemnitz, Alexander & Roessler, Martin, 2017. "Economic development, democratic institutions, and repression in non-democratic regimes: Theory and evidence," CEPIE Working Papers 04/17, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    10. Suzanna-Maria Paleologou, 2015. "Income and democracy: the modernization hypothesis re-visited via alternative non-linear models," Empirical Economics, Springer, vol. 48(2), pages 909-921, March.
    11. Christopher J. Ellis & John Fender, 2014. "Public Sector Capital and the Transition from Dictatorship to Democracy," Manchester School, University of Manchester, vol. 82(3), pages 322-346, June.
    12. Heid, Benedikt & Langer, Julian & Larch, Mario, 2012. "Income and democracy: Evidence from system GMM estimates," Economics Letters, Elsevier, vol. 116(2), pages 166-169.
    13. Shirleen Manzur, 2022. "Are Elections Enough?," Discussion Papers dp22-05, Department of Economics, Simon Fraser University.
    14. Jess Benhabib & Alejandro Corvalen & Mark M. Spiegel, 2014. "Modernization and Discrete Measures of Democracy," Working Paper Series 2014-1, Federal Reserve Bank of San Francisco.
    15. Alexander Kemnitz & Martin Roessler, 2023. "The effects of economic development on democratic institutions and repression in non-democratic regimes: theory and evidence," Constitutional Political Economy, Springer, vol. 34(2), pages 145-164, June.
    16. Sequeira Tiago Neves, 2017. "Democracy and income: taking parameter heterogeneity and cross-country dependency into account," The B.E. Journal of Macroeconomics, De Gruyter, vol. 17(2), pages 1-19, June.
    17. Arayssi, Mahmoud & Fakih, Ali, 2017. "Finance–growth nexus in a changing political region: How important was the Arab Spring?," Economic Analysis and Policy, Elsevier, vol. 55(C), pages 106-123.
    18. Rajius Idzalika & Thomas Kneib & Inmaculada Martinez-Zarzoso, 2019. "The effect of income on democracy revisited a flexible distributional approach," Empirical Economics, Springer, vol. 56(4), pages 1207-1230, April.
    19. Michal Madr, 2016. "Economic Development as a Factor of Democratisation: Evidence from Post-Socialist Economies," MENDELU Working Papers in Business and Economics 2016-70, Mendel University in Brno, Faculty of Business and Economics.
    20. Filipe R. Campante & Davin Chor, 2012. "Why Was the Arab World Poised for Revolution? Schooling, Economic Opportunities, and the Arab Spring," Journal of Economic Perspectives, American Economic Association, vol. 26(2), pages 167-188, Spring.
    21. Nicholas Apergis & James E. Payne, 2017. "From education to democracy: evidence from long-run time-varying estimates," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 64(4), pages 313-325, December.
    22. Benhabib, Jess & Corvalan, Alejandro & Spiegel, Mark M., 2013. "Income and democracy: Evidence from nonlinear estimations," Economics Letters, Elsevier, vol. 118(3), pages 489-492.
    23. Matteo Cervellati & Florian Jung & Uwe Sunde & Thomas Vischer, 2014. "Income and Democracy: Comment," American Economic Review, American Economic Association, vol. 104(2), pages 707-719, February.
    24. Pittaluga, Giovanni B. & Reghezza, Alessio & Seghezza, Elena, 2020. "Reconsidering the modernization hypothesis: The role of diversified production and interest‐group competition," European Journal of Political Economy, Elsevier, vol. 65(C).

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    More about this item

    Keywords

    Democracy; Income; Lipset hypothesis; panel data;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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