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Economic downturns, inequality, and democratic improvements

Michael T. Dorsch and Paul Maarek

European Journal of Political Economy, 2020, vol. 62, issue C

Abstract: This paper explores the extent to which discrete improvements in the democratic quality of political institutions can be explained by income inequality. Empirical tests of this relationship have generally yielded null results, though typically test an unconditional relationship. Guided by a theoretical nuance of the “new economic view” of democratization and using an instrumental variable strategy, we re-examine the relationship conditional on the state of the macroeconomy. We demonstrate that the more unequal are societies, the higher the probability of experiencing democratic improvements following economic downturns. Following growth periods, higher income inequality has a slight negative or null effect on the likelihood of democratic improvement. The conditional result provides a simple explanation for why previous literature has found largely null results concerning inequality and democratization and offers additional evidence in support of the new economic view.

Keywords: Democratization; Distributive conflict; Inequality; Window of opportunity (search for similar items in EconPapers)
JEL-codes: D72 D74 O15 P16 P48 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.ejpoleco.2020.101856

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