Wealth Inequality and Democracy

Sutirtha Bagchi and Matthew Fagerstrom ()
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Matthew Fagerstrom: Zell/Lurie Real Estate Center, University of Pennsylvania, https://sites.google.com/view/matthew-fagerstrom/home

No 57, Villanova School of Business Department of Economics and Statistics Working Paper Series from Villanova School of Business Department of Economics and Statistics

Abstract: Scholars have studied the relationship between land inequality, income inequality, and democracy extensively, but have reached contradictory conclusions that have resulted from competing theories and methodologies. However, despite its importance, the effects of wealth inequality on democracy have not been examined empirically. We use a panel dataset of billionaire wealth from 1987 to 2012 to determine the impact of wealth inequality on the level of democracy. To measure democracy, we rely on Polity scores and the Varieties of Democracy (V-Dem) index. We find no empirical support for the hypothesis that overall wealth inequality or inherited wealth inequality has an impact on democracy. However, we find evidence that politically connected wealth inequality lowers V-Dem scores. Following Boix (2003), we investigate the hypothesis that capital mobility moderates the relationship between wealth inequality and democracy and find evidence that increased capital mobility mitigates the negative impact of politically connected wealth inequality on democracy.

Keywords: Wealth Inequality; Democratization; Capital Mobility (search for similar items in EconPapers)
JEL-codes: D31 H11 P48 (search for similar items in EconPapers)
Date: 2022-09
New Economics Papers: this item is included in nep-his
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Journal Article: Wealth inequality and democracy (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:vil:papers:57

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