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

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  • 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.

Suggested Citation

  • Sunde, Uwe & Cervellati, Matteo & Fortunato, Piergiuseppe, 2007. "Are All Democracies Equally Good? The Role of Interactions between Political Environment and Inequality for Rule of Law," IZA Discussion Papers 2984, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2984
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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. Ezcurra, Roberto & Zuazu, Izaskun, 2019. "Political equality and quality of government," MPRA Paper 96476, University Library of Munich, Germany.
    4. Alberto Chong & Mark Gradstein, 2017. "Political and Economic Inequities and the Shaping of Institutions and Redistribution," Southern Economic Journal, John Wiley & Sons, vol. 83(4), pages 952-971, April.
    5. Gutmann, Jerg & Voigt, Stefan, 2018. "The rule of law: Measurement and deep roots," European Journal of Political Economy, Elsevier, vol. 54(C), pages 68-82.
    6. Li-Chen Chou & Wan-Hao Zhang & Meng-Ying Wang & Fu-Ming Yang, 2020. "The influence of democracy on emissions and energy efficiency in America: New evidence from quantile regression analysis," Energy & Environment, , vol. 31(8), pages 1318-1334, December.
    7. Bruno Emmanuel Ongo Nkoa & Jacques Simon Song, 2022. "Does Institutional Quality increase inequalities in Africa?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(3), pages 1896-1927, September.
    8. Piergiuseppe Fortunato & Ugo Panizza, 2015. "Democracy, education and the quality of government," Journal of Economic Growth, Springer, vol. 20(4), pages 333-363, December.
    9. Tommy Krieger, 2022. "Democracy and the quality of economic institutions: theory and evidence," Public Choice, Springer, vol. 192(3), pages 357-376, September.
    10. Kotschy, Rainer & Sunde, Uwe, 2017. "Democracy, inequality, and institutional quality," European Economic Review, Elsevier, vol. 91(C), pages 209-228.
    11. Krieger, Tommy, 2022. "Democracy and the quality of economic institutions: Theory and evidence," ZEW Discussion Papers 22-032, ZEW - Leibniz Centre for European Economic Research.
    12. 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.
    13. 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).
    14. Piergiuseppe Fortunato, 2015. "Democratic Government and Development: A Survey," Asian Development Review, MIT Press, vol. 32(2), pages 153-177, September.
    15. 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, August.
    16. 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.
    17. 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.
    18. Marta Marson & Matteo Migheli & Donatella Saccone, 2021. "New evidence on the link between ethnic fractionalization and economic freedom," Economics of Governance, Springer, vol. 22(3), pages 257-292, September.
    19. Kemp-Benedict, Eric, 2011. "Political regimes and income inequality," Economics Letters, Elsevier, vol. 113(3), pages 266-268.
    20. Roberto Ezcurra & Izaskun Zuazu, 2022. "Political equality and quality of government," Kyklos, Wiley Blackwell, vol. 75(2), pages 269-293, May.
    21. 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.
    22. Alberto Chong & Mark Gradstein, 2019. "Institutional persistence, income inequality, and individual attitudes," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 17(3), pages 401-413, September.
    23. Petar Stankov, 2017. "Economic Freedom and Welfare Before and After the Crisis," Springer Books, Springer, number 978-3-319-62497-6.

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    More about this item

    Keywords

    democracy; inequality; interactions; rule of law; institutions;
    All these keywords.

    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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