Democracy and Income In-Equality: An Empirical Analysis
While standard political economy theories suggest a moderating effect of democratization on income inequality, empirical literature has failed to uncover any such robust relationship. Here we take yet another look at this issue arguing first, that prevailing ideology may be an important determinant of inequality and, second, that the democratization effect “works through” ideology. In societies where equality is highly valued there is less of a distributional conflict across income groups, hence democratization may have only a negligible effect on inequality. On the other hand, in societies where equality is not valued as much, democratization reduces inequality through redistribution as the poor outvote the rich. Our cross-country empirical analysis, covering the period 1960-98 and 126 countries, confirms the hypothesis: ideology – as proxied by a country’s dominant religion – seems to be related to inequality. But in addition, in Judeo-Christian societies increased democratization appears to lead to lower inequality, while in Muslim and Confucian societies democratization has only an insignificant effect on inequality. We hypothesize that in the latter group of countries, desired level of inequality is reached through informal transfers, while in Judeo-Christian societies where family ties are weaker, desired outcome is achieved by political action.
|Date of creation:||2001|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Deininger, Klaus & Squire, Lyn, 1996.
"A New Data Set Measuring Income Inequality,"
World Bank Economic Review,
World Bank Group, vol. 10(3), pages 565-91, September.
- Klaus Deininger & Lyn Squire, 1996. "A New Data Set Measuring Income Inequality," CEMA Working Papers 512, China Economics and Management Academy, Central University of Finance and Economics.
- Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999. "A Data Set on Income Distribution," CEMA Working Papers 575, China Economics and Management Academy, Central University of Finance and Economics.
- Rodrik, Dani, 1998.
"Democracies Pay Higher Wages,"
CEPR Discussion Papers
1776, C.E.P.R. Discussion Papers.
- Gary S. Becker, 1974.
"A Theory of Social Interactions,"
NBER Working Papers
0042, National Bureau of Economic Research, Inc.
- Persson, Torsten & Tabellini, Guido, 2002.
"Political economics and public finance,"
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 24, pages 1549-1659
- Torsten Persson & Guido Tabellini, 1999. "Political Economics and Public Finance," NBER Working Papers 7097, National Bureau of Economic Research, Inc.
- Torsten Persson & Guido Tabellini, . "Political Economics and Public Finance," Working Papers 149, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Persson, Torsten & Tabellini, Guido, 1999. "Political Economics and Public Finance," CEPR Discussion Papers 2235, C.E.P.R. Discussion Papers.
- repec:cup:cbooks:9780521433297 is not listed on IDEAS
- Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
- Li, Hongyi & Squire, Lyn & Zou, Heng-fu, 1998.
"Explaining International and Intertemporal Variations in Income Inequality,"
Royal Economic Society, vol. 108(446), pages 26-43, January.
- Hongyi Li & Lyn Squire & Heng-fu Zou, 1998. "Explaining International and Intertemporal Variations in Income Inequality," CEMA Working Papers 73, China Economics and Management Academy, Central University of Finance and Economics.
- Bisin, Alberto & Verdier, Thierry, 2000.
"A model of cultural transmission, voting and political ideology,"
European Journal of Political Economy,
Elsevier, vol. 16(1), pages 5-29, March.
- Bisin, A. & Verdier, T., 1999. "A Model of Cultural Transmission, Voting and Political Ideology," Papers 1999-13, Laval - Laboratoire Econometrie.
- Bisin, A. & Verdier, T., 1999. "A model of cultural transmission, voting and political ideology," DELTA Working Papers 1999-13, DELTA (Ecole normale supérieure).
- Easterly, William, 2001.
" The Middle Class Consensus and Economic Development,"
Journal of Economic Growth,
Springer, vol. 6(4), pages 317-35, December.
- Easterly, William, 2000. "the middle class consensus and economic development," Policy Research Working Paper Series 2346, The World Bank.
- repec:cup:cbooks:9780521438827 is not listed on IDEAS
- Ahluwalia, Montek S., 1976. "Inequality, poverty and development," Journal of Development Economics, Elsevier, vol. 3(4), pages 307-342, December.
- Michael Rothschild & Joseph E. Stiglitz, 1972.
"Some Further Results on the Measurement of Inequality,"
Cowles Foundation Discussion Papers
344, Cowles Foundation for Research in Economics, Yale University.
- Rothschild, Michael & Stiglitz, Joseph E., 1973. "Some further results on the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 6(2), pages 188-204, April.
- John Micklewright & John Flemming, 1999.
"Income Distribution, Economic Systems and Transition,"
iopeps99/69, Innocenti Occasional Papers, Economic Policy Series.
- Flemming, J.S. & Micklewright, John, 2000. "Income distribution, economic systems and transition," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 14, pages 843-918 Elsevier.
- Hillman, Arye L. & Ursprung, Heinrich W., 2000. "Political culture and economic decline," European Journal of Political Economy, Elsevier, vol. 16(2), pages 189-213, June.
- Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
- Beck, Thorsten & Clarke, George & Groff, Alberto & Keefer, Philip & Walsh, Patrick, 2000. "New tools and new tests in comparative political economy - the database of political institutions," Policy Research Working Paper Series 2283, The World Bank.
- Perotti, Roberto, 1996. " Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-87, June.
- Milanovic, Branko & DEC, 1994. "Determinants of cross-country income inequality : an augmented Kuznets hypothesis," Policy Research Working Paper Series 1246, The World Bank.
- Hochman, Harold M & Rodgers, James D, 1969. "Pareto Optimal Redistribution," American Economic Review, American Economic Association, vol. 59(4), pages 542-57, Part I Se.
- Milanovic, Branko, 2000. "The median-voter hypothesis, income inequality, and income redistribution: an empirical test with the required data," European Journal of Political Economy, Elsevier, vol. 16(3), pages 367-410, September.
- Gradstein, Mark & Justman, Moshe, 2000. "Human capital, social capital, and public schooling," European Economic Review, Elsevier, vol. 44(4-6), pages 879-890, May.
- Milanovic, Branko, 1998. "Explaining the increase in inequality during the transition," Policy Research Working Paper Series 1935, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_411. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra)
If references are entirely missing, you can add them using this form.