Does Liberte=Egalite? A Survey of the Empirical Evidence on the Links Between Political Democracy and Income Inequality

Abstract:     
The relationship between the distribution of political rights and that of economic resources has been studied both theoretically and empirically. This paper reviews the existing literature and, in particular, the available empirical evidence. Our reading of the literature suggests that formal exclusion from the political process through restrictions on voting franchise appears to have caused a high degree of economic inequality, and democratization in the form of franchise expansion has typically led to an expansion in redistribution, at least in the small sample of episodes studied. Similarly, and more emphatically compared to the ambiguous results of the earlier research, more recent evidence indicates an inverse relationship between other measures of democracy, based on civil liberties and political rights, and inequality. The transition experience of the East European countries, however, seems to some extent to go against these conclusions. This, in turn, opens possible new vistas for research, namely the need to incorporate the length of democratic experience and the role played by ideology and social values.

JEL Classifications: D31, D72

Working Paper Series