Which Democracies Pay Higher Wages?*

James Rockey and Miltiadis Makris

No 11/09, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: The labor share of income varies markedly across the set of democracies. A model of the political process, situated in a simple macroeconomic environment is analyzed in which the cause of this variation is linked to differences in the form of democracy - in particular the adoption of a presidential or parliamentary system. Presidential regimes are associated with lower taxation but lower wages. Robust evidence for the negative impact of a presidential system on the labor share is obtained using a Bayesian Model Averaging approach. Evidence is also provided that this is due to lower taxation.

Keywords: Fertility; Economic growth; Health expenditures (search for similar items in EconPapers)
Date: 2010-11
New Economics Papers: this item is included in nep-lab and nep-pol
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Citations: View citations in EconPapers (1)

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Working Paper: Which Democracies Pay Higher Wages? (2007)
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