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Reinvestigating the Reciprocal Relationship between Democracy and Income Inequality

Review of Economics and Institutions

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Title Reinvestigating the Reciprocal Relationship between Democracy and Income Inequality
 
Creator Knutsen, Carl Henrik; Department of Political Science, University of Oslo

Secondary affil.: Centre for the Study of Civil War, PRIO

Secondary affil.: ESOP, Department of Economics, University of Oslo
 
Subject Political Science; Economics; Comparative Politics; Political Economy
Democracy; Income Inequality; Democratization; Democratic stability; Wage income; Redistribution
D02; D63; O10; P00
 
Description Few social science relationships have spawned as much interest -- or as many elaborate theoretical models and arguments -- as that between democracy and income inequality. However, the empirical literature has generally employed statistical models based on problematic assumptions, and has produced quite mixed results. Hence, this paper makes an important empirical contribution by applying models that, for instance, account for endogeneity biases and control for country-specific effects. Despite being correlated, there is very little evidence of any effect of income inequality on level of democracy once employing appropriate model specifications. Furthermore, there is no robust evidence that inequality systematically affects either democratization prospects or democratic stability. In contrast, there is evidence that democracy reduces income inequality when inequality is proxied by share of income going to wages. However, also this effect is sensitive to choice of inequality measure. Democracy does, for instance, not reduce inequalities in disposable household incomes.
 
Publisher University of Perugia
 
Contributor —
 
Date 2015-12-10
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.rei.unipg.it/rei/article/view/173
10.5202/rei.v6i2.173
 
Source Review of Economics and Institutions; Vol 6, No 2 (2015); 37
2038-1379
2038-1344
 
Language eng
 
Relation http://www.rei.unipg.it/rei/article/view/173/158
http://www.rei.unipg.it/rei/article/downloadSuppFile/173/24
 
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