Inequality, Privatization and Democratic Institutions in Developing Countries

Lidia Ceriani (), Simona Scabrosetti and Francesco Scervini

No 118, Working Papers from "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi

Abstract: According to the existing theoretical literature, there are several channels through which privatization of State-owned enterprises and assets may shape the distribution of income, either increasing or decreasing the level of inequality. Assessing the actual distributional impact of privatization becomes therefore an empirical matter. This paper is a first attempt to empirically investigate the relationship between privatization and income inequality through redistribution, focusing on the role of democratic institutions in developing countries. Using an unbalanced panel of lowand middle-countries in the period 1988-2008, we find that an increase in privatization revenue is negatively and significantly correlated with net-income inequality when democratic institutions are well consolidated. All the robustness checks we perform confirm this finding. Thus, our analysis seems to suggest that, in developing countries, policy makers's choice of implementing divestiture programs while democratizing at the same time may lead to an improvement in income equality.

Keywords: Inequality; Democracy; Privatization; Developing countries (search for similar items in EconPapers)
Pages: 28 pages
Date: 2018-05
New Economics Papers: this item is included in nep-pol
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Related works:
Journal Article: Inequality, Privatization and Democratic Institutions in Developing Countries (2022)
Working Paper: Inequality, Privatization and Democratic Institutions in Developing Countries (2016)
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