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

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.

Keywords: inequality, democracy, institutions, rule of law, interactions

JEL Classification: O43, P48, P14