Democracy and Income Inequality: Revisiting the Long- and Short-Term Relationship

32 Pages Posted: 6 Nov 2010 Last revised: 8 Nov 2010

Date Written: November 4, 2010

Abstract

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 the different (and opposing) transmission mechanisms, as well as the nature and the definition of the democracy variables (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.

Suggested Citation

Nikoloski, Zlatko, Democracy and Income Inequality: Revisiting the Long- and Short-Term Relationship (November 4, 2010). Available at SSRN: https://ssrn.com/abstract=1703225 or http://dx.doi.org/10.2139/ssrn.1703225

Zlatko Nikoloski (Contact Author)

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

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