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2005, SSRN Electronic Journal
We examine whether democratic societies can escape poverty traps. Unrestricted agenda setting with simple majority rules fail to educate a society, because education-enhancing redistribution will not occur. We show that a combination of suitable constitutional rules overcomes this impossibility result: rotating agenda setting and agenda repetition in combination with flexible majority rules or with a tax protection rule.
1993
We ask what redistributions of income and assets are feasible in a democracy, given the initial assets and their distribution. The question is motivated by the possibility that if redistribution is insufficient for the poor or excessive for the rich, they may turn against democracy. In turn, if no redistribution simultaneously satisfies the poor and the wealthy, democracy cannot be sustained. Hence, the corollary question concerns the conditions under which democracy is sustainable. We find that democracies survive in wealthy societies. Conditional on the initial income distribution and the capacity of the poor and the wealthy to overthrow democracy, each country has a threshold of capital stock above which democracy survives. This threshold is lower when the distribution of initial endowments is more equal and when the revolutionary prowess of these groups is lower. Yet in poor unequal countries there exist no redistribution scheme which would be accepted both by the poor and the wealthy. Hence, democracy cannot survive. As endowments increase, redistribution schemes that satisfy both the poor and the wealthy emerge. Moreover, as capital stock grows the wealthy tolerate more and the poor less redistribution, so that the set of feasible redistributions becomes larger. Since the median voter prefers one such scheme to the dictatorship of either group, democracy survives.
Economic Theory, 2006
We ask what redistributions of income and assets are feasible in a democracy, given the initial assets and their distribution. The question is motivated by the possibility that if redistribution is insufficient for the poor or excessive for the rich, they may turn against democracy. In turn, if no redistribution simultaneously satisfies the poor and the wealthy, democracy cannot be sustained. Hence, the corollary question concerns the conditions under which democracy is sustainable. We find that democracies survive in wealthy societies. Conditional on the initial income distribution and the capacity of the poor and the wealthy to overthrow democracy, each country has a threshold of capital stock above which democracy survives. This threshold is lower when the distribution of initial endowments is more equal and when the revolutionary prowess of these groups is lower. Yet in poor unequal countries there exist no redistribution scheme which would be accepted both by the poor and the wealthy. Hence, democracy cannot survive. As endowments increase, redistribution schemes that satisfy both the poor and the wealthy emerge. Moreover, as capital stock grows the wealthy tolerate more and the poor less redistribution, so that the set of feasible redistributions becomes larger. Since the median voter prefers one such scheme to the dictatorship of either group, democracy survives.
Journal of Development Economics, 2008
This paper empirically analyzes the influence of education on democracy by controlling for unobservable heterogeneity and by taking into account the persistency of some of the variables. The most novel finding is that an increase in the education attained by the majority of the population is what matters for the implementation and sustainability of democracy, rather than the average years of schooling. We show this result is robust to issues pertaining omitted variables, outliers, sample selection, or a narrow definition of the variables used to measure democracy.
Public Choice, 2005
Observation shows that while democracy is fragile in poor countries, it is impregnable in developed ones. To explain this pattern, I develop a model in which political parties propose redistributions of incomes, observe the result of an election, and decide whether to comply with the outcome or to launch a struggle for dictatorship. Democracy prevails in developed societies because too much is at stake in turning against it. More income can be redistributed in developed than in poor countries without threatening democracy. Limits on redistribution arise endogenously, so that constitutions are not necessary for democracy to endure. A democratic culture characterizes the equilibrium.
2015
Pre-introductory remarks In order to gain legitimacy, a basic income scheme – like any other welfare-political measure – must be in accordance with basic political ideals and beliefs of the polity. Very often this has led to a focus on the principle of reciprocity and to discussions concentrating on whether or not a basic income would violate this principle (cf. Kildal, ….; Gutmann…; Rothstein). While not at all denying the importance of this problematic, this paper intends to relate the idea of a basic income to another deeply fundamental and also widely recognized idea, namely that of democracy. Now, of course, ‘democracy ’ is an extremely contested notion, and there are a lot of suggestions as to how its deeper meaning or its ‘regulative ideal ’ (Miller 1993) should be specified. One such suggestion is democracy understood as deliberative democracy, and in the paper it is argued not only that this regulative ideal of democracy is more valid and rewarding than – in broad terms – ‘...
Research Papers in Economics, 2013
Mainstream economists usually identify a fundamental conflict between efficiency and justice in re-source allocation: markets are generally considered an efficient allocation tool, but create unequal results. Corresponding governmental redistribution shall equalize some of these market results, but leads to inefficiency due to disincentives both for net payers and net receivers. Consequently, this pa-per analyses the impact of social inequality on distributive choices in an experimental democracy. In our experiment, we find that stark inequality is generally accepted provided a strong egalitarian in-come floor is ensured. Even though our samples showed a very strong egalitarian inclination, complete egalitarianism was not a stable outcome. Some degree of differentiation always emerged on an initial egalitarian base.
Public Economics, 2003
While standard political economy theories suggest a moderating effect of democratization on income inequality, empirical literature has failed to uncover any such robust relationship. Here we take yet another look at this issue arguing first, that prevailing ideology may be an important determinant of inequality and, second, that the democratization effect "works through" ideology. In societies where equality is highly valued there is less of a distributional conflict across income groups, hence democratization may have only a negligible effect on inequality. On the other hand, in societies where equality is not valued as much, democratization reduces inequality through redistribution as the poor outvote the rich. Our crosscountry empirical analysis, covering the period 1960-98 and 126 countries, confirms the hypothesis: ideology-as proxied by a country's dominant religion-seems to be related to inequality. But in addition, in Judeo-Christian societies increased democratization appears to lead to lower inequality, while in Muslim and Confucian societies democratization has only an insignificant effect on inequality. We hypothesize that in the latter group of countries, desired level of inequality is reached through informal transfers, while in Judeo-Christian societies where family ties are weaker, desired outcome is achieved by political action.
SSRN Electronic Journal, 2019
We experimentally study the disincentive effect of taxing work and redistributing tax revenues when redistribution is imposed vs. democratically chosen in a vote. We find a "dividend of democracy" in the sense that the disincentive effect is substantially smaller when redistribution is chosen in a vote than when it is imposed. Redistribution seems to be more legitimate, and hence less demotivating, when accepted in a vote.
We analyze the relationship between individual income and vote choice across 23 democracies. Our goal is to understand how the economic, social and institutional context affects support by low-, middle-and high-income voters for political parties that oppose taxes and redistribution. We examine how macro level variables related to ethnic heterogeneity, national wealth, electoral laws, and party systems affect the "redistributive center of gravity" (the propensity for all voters in a country to support right-wing parties') and income-based voting polarization (i.e., differences in voting by different income groups).
Elektronik Sosyal Bilimler Dergisi, 2019
This paper replicates the data set of Acemoglu et al. (2008) to investigate the relationship between the level of income and the degree of democracy in terms of advanced economies over the period 1960-2000. The study extends the initial findings of Acemoglu et al. (2008) in terms of econometric procedures by using the system-GMM and allowing for more flexiblenon-linearspecifications for the effect of income on democracy. The empirical results provide evidence of positive and non-linear effect from income to democracy for advanced economies even after controlling for country-specific effects. In addition, with the same data set that of Acemoglu et al. (2008), we find that the coefficients of log GDP per capita are positive and statistically significant in most specifications by way of using the system-GMM method, in contrast to the results provided by Acemoglu et al. (2008). Furthermore, an interesting result is the square term of log GDP per capita which is negative and statistically significant. This outcome indicates that while the initial stages of an increase in log GDP per capita have a positive impact on democracy, the latter stages show that this positive correlation turns into a negative possibly due to the changing dynamics of the power of income segments in the society.
SSRN Electronic Journal, 2010
This paper studies the relationship between democracy and income inequality in long-and short/medium-run. Using appropriate econometric techniques on both, averaged and panel data for the period 1962-2006, we find no evidence that democracy is associated with tighter income distribution. Our results are robust to different specification techniques, to exclusion of developed as well as the transition countries. We speculate that different (and opposing) transmission mechanisms, as well as the nature and the definition of the democracy variable (both Polity IV and Freedom House) influence our results. Improvement of conceptualization and measurement of democracy could shed further light onto the democracy-inequality nexus.
European Journal of Political Economy, 2014
This paper studies the endogenous emergence of political regimes, in particular democracy, oligarchy and mass dictatorship, in societies in which productive resources are distributed unequally and institutions do not ensure political commitments. The political regime is shown to depend not only on income levels, but also, in particular, on resource inequality. The main results imply that under any economic environment a distribution of resources exists such that democracy is the political outcome. This distribution is independent of the particular income level if the income share generated by the poor is sufficiently large. On the other hand, there are distributions of resources for which democracy is infeasible in equilibrium regardless of the level of economic development. The model also delivers results on the stability of democracy. Variations in inequality across several dimensions due to unbalanced technological change, immigration or changes in the demographic structure affect the scope for democracy or may even lead to its breakdown. Among other historical examples, the results are consistent with the different political regimes that emerged in Germany after its unification in 1871.
LUISS, School of Management, 2018
This paper discusses the relationship between democracy and economic inequality and argues that economic inequality undermines democratic systems and democratic legitimacy. Creating a more credible and resilience democracy would be based on a more equal economic distribution. Because economic inequality increases the relative power of richer citizens and thereby undermines political equality and depress democracy. Therefore, higher levels of economic inequality tend to depress political engagement and democracy.
SSRN Electronic Journal, 2000
While standard political economy theories suggest a moderating effect of democratization on income inequality, empirical literature has failed to uncover any such robust relationship. Here we take yet another look at this issue arguing first, that prevailing ideology may be an important determinant of inequality and, second, that the democratization effect "works through" ideology. In societies where equality is highly valued there is less of a distributional conflict across income groups, hence democratization may have only a negligible effect on inequality. On the other hand, in societies where equality is not valued as much, democratization reduces inequality through redistribution as the poor outvote the rich. Our cross-country empirical analysis, covering the period 1960-98 and 126 countries, confirms the hypothesis: ideology -as proxied by a country's dominant religion -seems to be related to inequality. But in addition, in Judeo-Christian societies increased democratization appears to lead to lower inequality, while in Muslim and Confucian societies democratization has only an insignificant effect on inequality. We hypothesize that in the latter group of countries, desired level of inequality is reached through informal transfers, while in Judeo-Christian societies where family ties are weaker, desired outcome is achieved by political action.
Ph.D Thesis, 2019
The study of the relation between democracy and income inequality is puzzling scholars at least since the 1970s, however, there is still no agreement about how the relation between the two variables would shape nor how the causal mechanisms would work, and some scholars even denied the presence of any causal relation. The aim of the present work is to shed light on such a disagreement by addressing the relation between the two variables from a political science rather than a purely economic viewpoint, developing a more complete theoretical framework abandoning some of the economic premises mostly employed insofar. In particular, the work aimed to answer the following main research questions: does, and through which channels, the state’s regime influences its levels of inequality? Does, and through which channels, inequality influence a state’s regime? Is there a reciprocal rather than unidirectional causal relation between the two variables? Through the employment of a mixed inductive/deductive approach, the present work firstly analyses the theoretical and empirical literature on the subject. Secondly, based on the literature and on the most established theories, it presents some speculations about the functioning and the mechanisms underlying the relation between the two variables. Thirdly, to refine the theory, and to assess the presence of variables and sub-mechanisms interfering with the principal relations, it carries out the study of three peculiar cases that deviates from the established theories and from the speculations. Fourthly, using the insights provided by the case studies, it elaborates a refined theoretical framework capable to explain the relation between the two variables. Lastly, from the theoretical framework, it elaborates several hypotheses and tested them employing different econometric approaches. With respect to the two main variables, the quantitative analysis employed data on Gini from the Standardized World Income Inequality Dataset, and data on the quality of democracy respectively from the Unified Democracy Scores Dataset, the Polity IV Dataset and the Global States of Democracy Dataset. The estimates performed revealed some interesting results. First the estimates confirm that the quality of regime significantly reduce inequality, but only after a certain level of regime quality following the pattern of a political Kuznets curve, and that at the same time inequality negatively and significantly influences the quality of government. Second, they also confirmed the presence of a reciprocal causal relation between the two variables. In addition, the estimate confirmed that other variables and mechanisms concur in shaping the relation between the two main variables. In particular, education and the presence of a leftist government have a negative effect on inequality, corruption and the adherence to the economic neo-liberalism do increase countries’ levels of inequality, protests increase the quality of the regime, and that repression, on the contrary, does not have any significant effect on the quality of the regime. Third, the estimates also confirmed that citizens’ attitude toward inequality and redistribution and citizens’ perceptions on social mobility do influence countries’ levels of inequality. Lastly, the analysis of the effects of the different attributes of democracy on inequality and vice versa, through the employment of the Global state of Democracy indices, highlights that only some attributes of democratic quality significantly influence inequality while only some attributes are significantly influenced by inequality.
Metroeconomica, 2020
The processes and the reasons for democratization of a country are a topic that captures and has captured the attention of several scholars during the last decades. Democracies are known to be
Constitutional Political Economy , 2014
The statistical relationship between economic development and duration of democracy is one of the strongest in Political Science. Nevertheless, the theoretical mechanisms underlying this statistical link have been debated for decades. Adam Przeworski has proposed the simplest explanation, by indicating that wealth itself increases the probability of sustaining democracy, economic development and democratic stability are thus directly related. This paper discusses whether the assumptions of the influential model of Przeworski (Public Choice, 123(3–4):253–273. doi:10.1007/s11127-005-7163-4, 2005) are plausible, and extends the analysis to a setting in which: (a) absolute per capita income varies; (b) people have preference for democracy independently of income; and (c) consumption is subject to diminishing marginal utility. The analysis demonstrates that the mechanics proposed by Przeworski (2005) are particularly recursive. One of the assumptions in his model implies in and of itself the final conclusion of the analysis, and if this contentious cornerstone is removed or slightly changed, it is no longer possible to conclude that economic development could create per se any democratic equilibrium.
Policy Research Working Papers, 2015
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
Journal of Economic Perspectives, 2013
During the past two generations, democratic forms have coexisted with massive increases in economic inequality in the United States and many other advanced democracies. Moreover, these new inequalities have primarily benefited the top 1 percent and even the top .01 percent. These groups seem sufficiently small that economic inequality could be held in check by political equality in the form of “one person, one vote.” In this paper, we explore five possible reasons why the US political system has failed to counterbalance rising inequality. First, both Republicans and many Democrats have experienced an ideological shift toward acceptance of a form of free market capitalism that offers less support for government provision of transfers, lower marginal tax rates for those with high incomes, and deregulation of a number of industries. Second, immigration and low turnout of the poor have combined to make the distribution of voters more weighted to high incomes than is the distribution of ...
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