Abstract:
We revisit one of the central empirical findings of the political economy literature that higher income per capita causes democracy. Existing studies establish a strong cross-country correlation between income and democracy, but do not typically control for factors that simultaneously affect both variables. We show that controlling for such factors by including country fixed effects removes the statistical association between income per capita and various measures of democracy. We also present instrumental-variables using two different strategies. These estimates also show no causal effect of income on democracy. Furthermore, we reconcile the positive cross-country correlation between income and democracy with the absence of a causal effect of income on democracy by showing that the long-run evolution of income and democracy is related to historical factors. Consistent with this, the positive correlation between income and democracy disappears, even without fixed effects, when we control for the historical determinants of economic and political development in a sample of former European colonies.
Downloads: (external link) http://www.nber.org/papers/w11205.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html.
Related works: Working Paper: Income and Democracy (2005) This item may be available elsewhere in EconPapers: Search for items with the same title.
Ordering information: This working paper can be ordered from http://www.nber.org/papers/w11205 The price is Paper copy available by mail.
More papers in NBER Working Papers from National Bureau of Economic Research, Inc Address: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A. Contact information at EDIRC. Series data maintained by ().
This site is part of RePEc
and all the data displayed here is part of the RePEc data set.
Is your work missing from RePEc? Here is how to
contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .