Democratization and inequality: Empirical evidence for the Organisation for Economic Co-operation and Development member countries

Sebastian Ille, Adrian Risso and Edgar Sánchez Carrera ()

Environment and Planning C, 2017, vol. 35, issue 6, 1098-1116

Abstract: The correlation between democracy and income inequality, as well as the direction of causation is still debated. In this paper, we conduct a dynamic panel data analysis for all 34 Organisation for Economic Co-operation and Development member states over the period 1960–2012 and illustrate a nonmonotonic relationship between inequality and democracy, as well as test the direction of causation by employing a noncausal homogeneity test in a panel Granger framework and the Dumitrescu and Hurlin noncausal heterogeneity test. We provide an explanation for the inverted U-shaped relation. In addition, we illustrate individual regression results for 12 exemplary Organisation for Economic Co-operation and Development countries and provide a concise illustration of the economic and political changes to which countries have been subjected while elaborating the effect of the underlying policies on democracy and income equality.

Keywords: Democracy; dynamic panel; Gini index; inequality; redistribution; unified democracy scores (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:envirc:v:35:y:2017:i:6:p:1098-1116

DOI: 10.1177/0263774X16684521

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