Long-Run Effects of Democracy on Income Inequality Evidence from Repeated Cross-Sections

Produced by: 
The World Bank
Available from: 
January 2015
Paper author(s): 
Carlos Felipe Balcázar
Politics and Economy
Poverty - Inequality - Aid Effectiveness

This paper assesses the link between democracy and inequality. Inequality is measured at the cohort level with pseudo-panel data built from nine Latin American countries’ household surveys (1995–2009, biannual). Democracy is measured as a stock during long periods of time both before and after each cohort’s year of birth. The paper presents evidence that long-run historical patterns in the degree of democracy relate to income inequality. However, this relationship is non-monotonic: inequality first increases with the stock of democracy before falling. The paper also presents evidence that education may be a mechanism explaining this result.


Research section: 
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