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Are All Democracies Equally Good? The Role of Interactions between Political Environment and Inequality for Rule of Law

Author Info

Listed author(s):
  • Sunde, Uwe

    ()

    (University of Munich)

  • Cervellati, Matteo

    ()

    (University of Bologna)

  • Fortunato, Piergiuseppe

    ()

    (UNCTAD)

Abstract

Using cross-country data, we find evidence for a significant negative interaction effect between democracy and inequality in determining the quality of growth-promoting institutions like rule of law. Democracy is associated with institutions of higher quality when inequality is lower.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2984.

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Length: 10 pages
Date of creation: Aug 2007
Handle: RePEc:iza:izadps:dp2984
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Keywords: democracy; inequality; interactions; rule of law; institutions;

Other versions of this item:

Find related papers by JEL classification:
  • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
  • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
  • P14 - Economic Systems - - Capitalist Systems - - - Property Rights

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  1. Alberto Chong & Mark Gradstein, 2007. "Inequality and Institutions," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 454-465, August.
  2. Rafael La Porta & Florencio Lopez-de-Silanes & Cristian Pop-Eleches & Andrei Shleifer, 2004. "Judicial Checks and Balances," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 445-470, April.
  3. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, 06.
  4. Matteo Cervellati & Piergiuseppe Fortunato & Uwe Sunde, 2008. "Hobbes to Rousseau: Inequality, Institutions and Development," Economic Journal, Royal Economic Society, vol. 118(531), pages 1354-1384, 08.
  5. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, World Bank Group, vol. 10(3), pages 565-591, September.
  6. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1203-1250.
  7. Dani Rodrik & Romain Wacziarg, 2005. "Do Democratic Transitions Produce Bad Economic Outcomes?," American Economic Review, American Economic Association, vol. 95(2), pages 50-55, May.
  8. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
  9. Keefer, Philip & Knack, Stephen, 2002. "Polarization, Politics and Property Rights: Links between Inequality and Growth," Public Choice, Springer, vol. 111(1-2), pages 127-154, March.
  10. Easterly, William, 2001. "The Middle Class Consensus and Economic Development," Journal of Economic Growth, Springer, vol. 6(4), pages 317-335, December.
  11. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  12. Chong, Alberto & Calderon, Cesar, 2000. "Institutional Quality and Income Distribution," Economic Development and Cultural Change, University of Chicago Press, vol. 48(4), pages 761-786, July.
  13. Torsten Persson & Guido Tabellini, 2004. "Constitutional Rules and Fiscal Policy Outcomes," American Economic Review, American Economic Association, vol. 94(1), pages 25-45, March.
  14. Sanjeev Gupta & Hamid Davoodi & Rosa Alonso-Terme, 2002. "Does corruption affect income inequality and poverty?," Economics of Governance, Springer, vol. 3(1), pages 23-45, 03.
  15. Mark Gradstein, 2007. "Inequality, democracy and the protection of property rights," Economic Journal, Royal Economic Society, vol. 117(516), pages 252-269, 01.
  16. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
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Cited by:

  1. Cervellati, Matteo & Fortunato, Piergiuseppe & Sunde, Uwe, 2011. "Democratization and Civil Liberties: The Role of Violence During the Transition," Economics Working Paper Series 1108, University of St. Gallen, School of Economics and Political Science.
  2. Garofalo, Maria Rosaria, 2011. "Il volontariato può sostenere lo sviluppo? Riflessioni metodologiche per la costruzione di un frame work teorico
    [Can the voluntary sector sustain the development path of an economy? Suggestions fo    ," MPRA Paper 40008, University Library of Munich, Germany.
  3. Piergiuseppe Fortunato & Ugo Panizza, 2015. "Democracy, education and the quality of government," Journal of Economic Growth, Springer, vol. 20(4), pages 333-363, December.
  4. Kotschy, Rainer & Sunde, Uwe, 2017. "Democracy, inequality, and institutional quality," European Economic Review, Elsevier, vol. 91(C), pages 209-228.
  5. Cervellati Matteo & Fortunato Piergiuseppe & Sunde Uwe, 2012. "Consensual and Conflictual Democratization," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 12(1), pages 1-51, December.
  6. Hossein Mirshojaeian Hosseini & Shinji Kaneko, 2012. "Spatial Spillover of Governance and Institutional Quality: A Spatial Econometric Approach," IDEC DP2 Series 2-3, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
  7. Piergiuseppe Fortunato, 2015. "Democratic Government and Development: A Survey," Asian Development Review, MIT Press, vol. 32(2), pages 153-177, September.
  8. Matteo Cervellati & Piergiuseppe Fortunato & Uwe Sunde, 2008. "Hobbes to Rousseau: Inequality, Institutions and Development," Economic Journal, Royal Economic Society, vol. 118(531), pages 1354-1384, 08.
  9. Andreas Assiotis & Kevin Sylwester, 2015. "Does Democracy Promote The Rule Of Law?," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 40(1), pages 63-92, March.
  10. A. Soci & A. Maccagnan & D. Mantovani, 2014. "Does inequality harm democracy? An empirical investigation on the UK," Working Papers wp935, Dipartimento Scienze Economiche, Universita' di Bologna.
  11. Kemp-Benedict, Eric, 2011. "Political regimes and income inequality," Economics Letters, Elsevier, vol. 113(3), pages 266-268.
  12. Jerg Gutmann & Stefan Voigt, 2015. "The Rule of Law: Measurement and Deep Roots," CESifo Working Paper Series 5670, CESifo Group Munich.
  13. repec:ilw:wpaper:0001 is not listed on IDEAS
  14. Matteo Cervellati & Piergiuseppe Fortunato & Uwe Sunde, 2015. "Roots and Fruits of Democracy: Natural Resources, Income Distribution and Social Violence," World Economic Review, World Economics Association, vol. 2015(4), pages 1-27, February.

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