Income and Democracy

Daron Acemoglu, Simon Johnson, James Robinson and Pierre Yared

American Economic Review, 2008, vol. 98, issue 3, 808-42

Abstract: Existing studies establish a strong cross-country correlation between income and democracy but do not 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 present instrumental-variables estimates that also show no causal effect of income on democracy. The cross-country correlation between income and democracy reflects a positive correlation between changes in income and democracy over the past 500 years. This pattern is consistent with the idea that societies embarked on divergent political-economic development paths at certain critical junctures.

JEL-codes: D72 O47 (search for similar items in EconPapers)
Date: 2008
Note: DOI: 10.1257/aer.98.3.808
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Citations: View citations in EconPapers (608)

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Related works:
Working Paper: Income and Democracy (2005)
Working Paper: Income and Democracy (2005)
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