Inequality, Democracy, and Institutions: A Critical Review of Recent Research

41 Pages Posted: 11 Jan 2010 Last revised: 27 Oct 2010

See all articles by Antonio Savoia

Antonio Savoia

University of Manchester - Global Development Institute

Joshy Easaw

University of Bath - Department of Economics

Andrew D. McKay

University of Sussex

Date Written: February 1, 2010

Abstract

This paper surveys the theoretical and empirical literature on the effect of economic and political inequality on institutions. The current understanding suggests that unequal societies develop exploitative and inefficient institutions. Empirical research - which is scant, and has mainly concentrated at cross-national level - supports, to some extent, the existence of an inverse relationship between inequality and institutions, but more analysis is needed. Future empirical research should undertake country, state, and micro-level analysis, which are a necessary complement to aggregate level studies. The effect of inequality could also take place indirectly, through the influence of inequality on democratization.

Keywords: inequality, institutions, democracy

JEL Classification: O15, O17, D70

Suggested Citation

Savoia, Antonio and Easaw, Joshy and McKay, Andrew D., Inequality, Democracy, and Institutions: A Critical Review of Recent Research (February 1, 2010). World Development, Vol. 38, No. 2, 2010. Available at SSRN: https://ssrn.com/abstract=1534902

Antonio Savoia (Contact Author)

University of Manchester - Global Development Institute ( email )

Arthur Lewis building
Oxford Road
Manchester, M13 9PL
United Kingdom

Joshy Easaw

University of Bath - Department of Economics ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

Andrew D. McKay

University of Sussex ( email )

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