Democracy and Income In-Equality: An Empirical Analysis

Mark Gradstein, Branko Milanovic and Yvonne Ying

No 411, CESifo Working Paper Series from CESifo

Abstract: While standard political economy theories suggest a moderating effect of democratization on income inequality, empirical literature has failed to uncover any such robust relationship. Here we take yet another look at this issue arguing first, that prevailing ideology may be an important determinant of inequality and, second, that the democratization effect “works through” ideology. In societies where equality is highly valued there is less of a distributional conflict across income groups, hence democratization may have only a negligible effect on inequality. On the other hand, in societies where equality is not valued as much, democratization reduces inequality through redistribution as the poor outvote the rich. Our cross-country empirical analysis, covering the period 1960-98 and 126 countries, confirms the hypothesis: ideology – as proxied by a country’s dominant religion – seems to be related to inequality. But in addition, in Judeo-Christian societies increased democratization appears to lead to lower inequality, while in Muslim and Confucian societies democratization has only an insignificant effect on inequality. We hypothesize that in the latter group of countries, desired level of inequality is reached through informal transfers, while in Judeo-Christian societies where family ties are weaker, desired outcome is achieved by political action.

Keywords: Inequality; democracy; religion (search for similar items in EconPapers)
Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo_wp411.pdf (application/pdf)

Related works:
Working Paper: Democracy and income inequality: an empirical analysis (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_411

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().