IDEAS home Printed from https://ideas.repec.org/p/urb/wpaper/19_06.html
   My bibliography  Save this paper

EClustering Democracy and Inequality

Author

Listed:
  • Giorgio Calcagnini

    (Department of Economics, Society & Politics, Università di Urbino Carlo Bo)

  • Edgar J. Sanchez Carrera

    (Department of Economics, Society & Politics, Università di Urbino Carlo Bo)

  • Rosalba Rombaldoni

    (Department of Economics, Society & Politics, Università di Urbino Carlo Bo)

Abstract

This research paper applies a technique based on data symbolization of regimes to detect clusters in the relationship between Democracy and Income Inequality for a panel of countries during the period 1970- 2012. Our results are the following: two clusters are identified and for both of them the Granger causality is unidirectional, going from democracy to inequality for cluster 1 (consolidated democracies and low levels of economic inequality) and from inequality to democracy for cluster 2 (weak democracies and high levels of economic inequality); the ARDL econometric technique shows a U-inverse relationship between the variables, with threshold values of democracy over which in cluster 1 inequality starts to decline, whereas for cluster 2 levels of inequality above the threshold value cause the democratic levels to fall drastically. The implications of such empirical results are that in the first case an advanced level of democracy can imply a progressive reduction of inequality, but still the free market mechanism has to be implemented with policies on three pillars: fiscal, educational and institutional. In the second case, inequality becomes intolerable and socially disruptive, and allows democracy to deteriorate, with the need of gradual and selective reforms to create a sensitivity to the dynamics of change.

Suggested Citation

  • Giorgio Calcagnini & Edgar J. Sanchez Carrera & Rosalba Rombaldoni, 2019. "EClustering Democracy and Inequality," Working Papers 1906, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2019.
    • Handle: RePEc:urb:wpaper:19_06
    as

    Download full text from publisher

    File URL: http://www.econ.uniurb.it/RePEc/urb/wpaper/WP_19_06.pdf
    File Function: First version, 2019
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Milanovic, Branko, 1999. "Do more unequal countries redistribute more? does the median voter hypothesis hold?," Policy Research Working Paper Series 2264, The World Bank.
    2. Daron Acemoglu & James A. Robinson, 2001. "A Theory of Political Transitions," American Economic Review, American Economic Association, vol. 91(4), pages 938-963, September.
    3. Daron Acemoglu & James A. Robinson, 2000. "Why Did the West Extend the Franchise? Democracy, Inequality, and Growth in Historical Perspective," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(4), pages 1167-1199.
    4. Freeman, John R. & Quinn, Dennis P., 2012. "The Economic Origins of Democracy Reconsidered," American Political Science Review, Cambridge University Press, vol. 106(1), pages 58-80, February.
    5. Acemoglu,Daron & Robinson,James A., 2009. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521671422, November.
    6. Frederick Solt, 2008. "Economic Inequality and Democratic Political Engagement," American Journal of Political Science, John Wiley & Sons, vol. 52(1), pages 48-60, January.
    7. Pemstein, Daniel & Meserve, Stephen A. & Melton, James, 2010. "Democratic Compromise: A Latent Variable Analysis of Ten Measures of Regime Type," Political Analysis, Cambridge University Press, vol. 18(4), pages 426-449.
    8. Corak, Miles, 2016. "Inequality from Generation to Generation: The United States in Comparison," IZA Discussion Papers 9929, Institute of Labor Economics (IZA).
    9. David L. Epstein & Robert Bates & Jack Goldstone & Ida Kristensen & Sharyn O'Halloran, 2006. "Democratic Transitions," American Journal of Political Science, John Wiley & Sons, vol. 50(3), pages 551-569, July.
      • David Epstein & Robert H. Bates & Jack Goldstone & Ida Kristensen & Sharyn O'Halloran, 2004. "Democratic Transitions," CID Working Papers 101, Center for International Development at Harvard University.
    10. Federico Cingano, 2014. "Trends in Income Inequality and its Impact on Economic Growth," OECD Social, Employment and Migration Working Papers 163, OECD Publishing.
    11. Sebastian Ille & Adrian Risso & Edgar J Sanchez Carrera, 2017. "Democratization and inequality: Empirical evidence for the Organisation for Economic Co-operation and Development member countries," Environment and Planning C, , vol. 35(6), pages 1098-1116, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sebastian Ille & Adrian Risso & Edgar J Sanchez Carrera, 2017. "Democratization and inequality: Empirical evidence for the Organisation for Economic Co-operation and Development member countries," Environment and Planning C, , vol. 35(6), pages 1098-1116, September.
    2. Laura Policardo & Edgar J. Sanchez Carrera, 2020. "Can income inequality promote democratization?," Metroeconomica, Wiley Blackwell, vol. 71(3), pages 510-532, July.
    3. Dorsch, Michael T. & Maarek, Paul, 2020. "Economic downturns, inequality, and democratic improvements," European Journal of Political Economy, Elsevier, vol. 62(C).
    4. Sunde, Uwe & Fortunato, Piergiuseppe & Cervellati, Matteo, 2011. "Democratization and Civil Liberties: The Role of Violence During the Transition," CEPR Discussion Papers 8315, C.E.P.R. Discussion Papers.
    5. Cervellati, Matteo & Fortunato, Piergiuseppe & Sunde, Uwe, 2014. "Violence during democratization and the quality of democratic institutions," European Economic Review, Elsevier, vol. 66(C), pages 226-247.
    6. Dae Jin Yi, 2012. "No taxation, no democracy? Taxation, income inequality, and democracy," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 15(2), pages 71-92.
    7. Andrea Asoni, 2008. "Protection Of Property Rights And Growth As Political Equilibria," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 953-987, December.
    8. Mark Gradstein & Branko Milanovic, 2004. "Does Libertè = Egalité? A Survey of the Empirical Links between Democracy and Inequality with Some Evidence on the Transition Economies," Journal of Economic Surveys, Wiley Blackwell, vol. 18(4), pages 515-537, September.
    9. Thomas Apolte, "undated". "Why is there no Revolution in North-Korea? The Political Economy of Revolution Revisited," Working Papers 200102, Institute of Spatial and Housing Economics, Munster Universitary.
    10. Patricia Justino, 2022. "Revisiting the links between economic inequality and political violence: The role of social mobilization," WIDER Working Paper Series wp-2022-19, World Institute for Development Economic Research (UNU-WIDER).
    11. Zissimos, Ben, 2017. "A theory of trade policy under dictatorship and democratization," Journal of International Economics, Elsevier, vol. 109(C), pages 85-101.
    12. Markus Brückner & Antonio Ciccone, 2011. "Rain and the Democratic Window of Opportunity," Econometrica, Econometric Society, vol. 79(3), pages 923-947, May.
    13. Robert K. Fleck & F. Andrew Hanssen, 2018. "Path dependence and transitions from tyranny to democracy: evidence from ancient Greece," Constitutional Political Economy, Springer, vol. 29(4), pages 371-388, December.
    14. David Castells-Quintana & Maria del Pilar Lopez-Uribe & Tom McDermott, 2015. "Climate change and the geographical and institutional drivers of economic development," GRI Working Papers 198, Grantham Research Institute on Climate Change and the Environment.
    15. Nedra Baklouti & Younes Boujelbene, 2018. "The Nexus Between Democracy and Economic Growth: Evidence from Dynamic Simultaneous-Equations Models," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(3), pages 980-998, September.
    16. Antonio Ciccone, 2013. "Estimating the Effect of Transitory Economic Shocks on Civil Conflict," Review of Economics and Institutions, Università di Perugia, vol. 4(2).
    17. Daron Acemoglu & Davide Ticchi & Andrea Vindigni, 2010. "A Theory of Military Dictatorships," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 1-42, January.
    18. Daron Acemoglu & James A. Robinson, 2008. "Persistence of Power, Elites, and Institutions," American Economic Review, American Economic Association, vol. 98(1), pages 267-293, March.
    19. Lindgren, Erik & Pettersson-Lidbom, Per & Tyrefors, Björn, 2020. "The Causal Effect of Political Power on the Provision of Public Education: Evidence from a Weighted Voting System," Working Paper Series 1315, Research Institute of Industrial Economics, revised 29 May 2021.
    20. Jung, Florian & Sunde, Uwe, 2014. "Income, inequality, and the stability of democracy — Another look at the Lipset hypothesis," European Journal of Political Economy, Elsevier, vol. 35(C), pages 52-74.

    More about this item

    Keywords

    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:urb:wpaper:19_06. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Carmela Nicoletti (email available below). General contact details of provider: https://edirc.repec.org/data/feurbit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.