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Inequality, Democracy, and Persistence: Is There a Political Kuznets Curve?

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  • Alberto Chong

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Abstract

The aim of this paper is to provide comprehensive empirical evidence on recent theories that link democracy and income inequality for the period 1960-1995. In simple cross-country regressions I find a non-monotonic link between these two variables when using ordinary least squares, instrumental variables, and Eusufzai tests. Since these results cannot be taken as "true" time series findings, even though recent theories that explain such a link are, I also employ recent methods applied to dynamic models on panel data. These techniques allow accounting for potential simultaneity and heterogeneity problems. Using the preferred econometric methodology, I also find support for the existence of a political Kuznets curve. Moreover, it appears that income inequality is unconditionally persistent. Results hold for two different democracy proxies and when sensitivity analysis is applied.

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  • Alberto Chong, 2001. "Inequality, Democracy, and Persistence: Is There a Political Kuznets Curve?," Research Department Publications 4253, Inter-American Development Bank, Research Department.
  • Handle: RePEc:idb:wpaper:4253
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    Cited by:

    1. Antonio Andres & Carlyn Ramlogan-Dobson, 2011. "Is Corruption Really Bad for Inequality? Evidence from Latin America," Journal of Development Studies, Taylor & Francis Journals, pages 959-976.
    2. Mauricio Olivera & Alberto E. Chong, 2005. "On Compulsory Voting and Income Inequality in a Cross-Section of Countries," IDB Publications (Working Papers) 1556, Inter-American Development Bank.
    3. Alberto Chong & Luisa Zanforlin, 2004. "Inward-Looking Policies, Institutions, Autocrats, and Economic Growth in Latin America: An Empirical Exploration," Public Choice, Springer, vol. 121(3), pages 335-361, February.
    4. Valerie Koechlin & Gianmarco Leon, 2007. "International Remittances and Income Inequality: An Empirical Investigation," Journal of Economic Policy Reform, Taylor & Francis Journals, pages 123-141.
    5. César Calderón & Alberto Chong, 2004. "Volume and Quality of Infrastructure and the Distribution of Income: An Empirical Investigation," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(1), pages 87-106, March.
    6. Alberto Chong & Luisa Zanforlin, 2004. "Inward-Looking Policies, Institutions, Autocrats, and Economic Growth in Latin America: An Empirical Exploration," Public Choice, Springer, pages 335-361.
    7. Asongu, Simplice, 2014. "Reinventing foreign aid for inclusive and sustainable development: a survey," MPRA Paper 65300, University Library of Munich, Germany.
    8. Balcazar Salazar,Carlos Felipe, 2015. "Long-run effects of democracy on income inequality : evidence from repeated cross-sections," Policy Research Working Paper Series 7153, The World Bank.
    9. Bjørnskov, Christian, 2010. "Do elites benefit from democracy and foreign aid in developing countries?," Journal of Development Economics, Elsevier, pages 115-124.
    10. Nohra Rey de Marulanda & Julio Guzmán, 2003. "Inequidad, desarrollo humano y política social: Importancia de las "Condiciones Iniciales"," IDB Publications (Working Papers) 1211, Inter-American Development Bank.
    11. Bergh, Andreas & Bjørnskov, Christian, 2014. "Trust, welfare states and income equality: Sorting out the causality," European Journal of Political Economy, Elsevier, vol. 35(C), pages 183-199.
    12. Unal Tongur & Adem Yavuz Elveren, 2012. "Military Expenditures, Inequality, and Welfare and Political Regimes: A Dynamic Panel Data Analysis," ERC Working Papers 1210, ERC - Economic Research Center, Middle East Technical University, revised Dec 2012.
    13. Christian Bjørnskov & Jacob Mchangama, 2013. "Do Social Rights Affect Social Outcomes?," Economics Working Papers 2013-18, Department of Economics and Business Economics, Aarhus University.
    14. Bergh, Andreas & Bjørnskov, Christian, 2013. "Trust, Welfare States and Income Equality: What Causes What?," Working Paper Series 994, Research Institute of Industrial Economics.
    15. Nikoloski, Zlatko, 2015. "Democracy and income inequality: revisiting the long and short-term relationship," LSE Research Online Documents on Economics 60562, London School of Economics and Political Science, LSE Library.
    16. Kemp-Benedict, Eric, 2011. "Political regimes and income inequality," Economics Letters, Elsevier, vol. 113(3), pages 266-268.
    17. Simplice Asongu, 2016. "Reinventing Foreign Aid For Inclusive And Sustainable Development: Kuznets, Piketty And The Great Policy Reversal," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 736-755, September.
    18. Parcero, Osiris J. & Papyrakis, Elissaios, 2016. "Income inequality and the oil resource curse," Resource and Energy Economics, Elsevier, vol. 45(C), pages 159-177.
    19. Alberto Chong & Mauricio Olivera, 2005. "On Compulsory Voting and Income Inequality in a Cross-Section of Countries," Research Department Publications 4413, Inter-American Development Bank, Research Department.
    20. Asongu, Simplice, 2014. "Taxation, foreign aid and political governance: figures to the facts of a celebrated literature," MPRA Paper 63792, University Library of Munich, Germany.
    21. Nohra Rey de Marulanda & Julio Guzmán, 2003. "Inequidad, desarrollo humano y política social: Importancia de las "Condiciones Iniciales"," IDB Publications (Working Papers) 10598, Inter-American Development Bank.

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