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Life may be unfair, but do democracies make it any less burdensome?

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  • Ọláyínká Oyèkọ́lá

    (University of Exeter)

Abstract

Using a large panel of countries, this paper studies whether, or not, democracies can disproportionately produce better economic outcomes for the poor than non-democracies. To deal with the endogeneity of democracy and inequality, a regional democratisation wave is used to isolate the exogenous variation in country-level democracy. Our main finding is that the exogenous component of democracy significantly and robustly decreased inequality in the long run, after controlling for key inequality determinants. We identify that the two potential mechanisms through which democracy affects inequality are structural transformation and middle-class bias channels. However, we find that this negative democracy-inequality link is reversed in the short run.

Suggested Citation

  • Ọláyínká Oyèkọ́lá, 2024. "Life may be unfair, but do democracies make it any less burdensome?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 22(3), pages 577-602, September.
    • Handle: RePEc:spr:joecin:v:22:y:2024:i:3:d:10.1007_s10888-023-09607-4
    DOI: 10.1007/s10888-023-09607-4
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    More about this item

    Keywords

    Democracy; Inequality; Structural transformation; Middle-class bias; Captured democracy;
    All these keywords.

    JEL classification:

    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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