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Inequality, Democracy and the Emergence of Institutions

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  • Gradstein, Mark

Abstract

This Paper considers the emergence of institutions as a political outcome, arguing that the support for protection of private property rights is stronger the higher is the economy's aggregate income and the more equal its distribution. When these conditions initially hold, the politically influential rich elite may prefer to relinquish its power through democratization in order to commit future policy-makers to the enforcement of private property rights, thus ensuring larger investment and growth. In a very unequal economy, however, this growth-enhancing democratization will not take place. These conclusions are shown to be consistent with the existing historical and cross-country evidence.

Suggested Citation

  • Gradstein, Mark, 2004. "Inequality, Democracy and the Emergence of Institutions," CEPR Discussion Papers 4187, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:4187
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    References listed on IDEAS

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    Cited by:

    1. Prabir De, 2010. "Governance, Institutions, and Regional Infrastructure in Asia," Working Papers id:3029, eSocialSciences.
    2. Enrico Perotti & Paolo Volpin, 2004. "Lobbying on Entry," Tinbergen Institute Discussion Papers 04-088/2, Tinbergen Institute.
    3. Alberto Chong & Mark Gradstein, 2007. "Inequality and Institutions," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 454-465, August.
    4. Joseph Keneck Massil, 2016. "Institutions, théories du changement institutionnel et déterminant de la qualité des institutions: les enseignements de la littérature économique," EconomiX Working Papers 2016-4, University of Paris Nanterre, EconomiX.
    5. Enrico Perotti & Paolo Volpin, 2007. "Investor Protection and Entry," Tinbergen Institute Discussion Papers 07-006/2, Tinbergen Institute.
    6. Alberto Chong & Mark Gradstein, 2004. "La desigualdad y las instituciones," Research Department Publications 4362, Inter-American Development Bank, Research Department.
    7. Gradstein, Mark, 2005. "Democracy, Property Rights, Redistribution and Economic Growth," CEPR Discussion Papers 5130, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    democracy; inequality; property rights;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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