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Taxation and More Representation?: On Fiscal Policy, Social Mobility and Democracy in Latin America

Christian Daude and Angel Melguizo

No 294, OECD Development Centre Working Papers from OECD Publishing

Abstract: Is the social contract in Latin America broken? Many authors have suggested this is the case, given the high levels of inequality, the low levels of taxation and the low quality of public services observed in the region. This paper analyses empirically the relationship between fiscal policy, social mobility and democratic consolidation in Latin America and the Caribbean, using the 2007 and 2008 rounds of the regional Latinobarómetro survey. In general, our results do not firmly support the prospect of upward mobility hypothesis, and show that the perception about the quality of public services, among others, matters for the willingness to pay taxes. All in all, we interpret our results as an indication of that – although there is still a long way to go – the potential basis for a stronger social contract in Latin America exists. Le contrat social est-il brisé (en crise) en Amérique latine ? C’est ce que de nombreux auteurs laissent entendre, qui s’appuient sur les fortes inégalités, le faible niveau de taxation et le manque de qualité des services publics de la région. Cet article analyse de façon empirique la relation entre la politique budgétaire, la mobilité sociale et la consolidation démocratique en Amérique latine et dans les Caraïbes, en utilisant les enquêtes régionales Latinobarómetro pour 2007 et 2008. D’une façon générale, nos résultats ne confortent pas complètement l’hypothèse de perspectives de mobilité sociale ascendante (POUM), et montrent l’influence de la perception de la qualité des services publics, entre autres choses, sur la disposition des contribuables à s’acquitter de leurs taxes et impôts. Bien qu’un long chemin reste encore à parcourir, nos résultats semblent globalement indiquer qu’il existe une base pour un renforcement du contrat social en Amérique Latine.

Keywords: Amérique latine; democracy; Démocratie; fiscal policy; Latin America; mobilité sociale; politique budgétaire; social mobility (search for similar items in EconPapers)
JEL-codes: E62 I38 P16 (search for similar items in EconPapers)
Date: 2010-10-25
New Economics Papers: this item is included in nep-lam, nep-mac and nep-pbe
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