Work

Income and Democracy

Year: 2005

Type: article

Abstract: Existing studies establish a strong cross-country correlation between income and democracy but do not control for factors that simultaneously affect both variables. We show that controlling for such factors by including country fixed effects removes the statistical association between income per capita and various measures of democracy. We present instrumental-variables estimates that also show no causal effect of income on democracy. The cross-country correlation between income and democracy reflects a positive correlation between changes in income and democracy over the past 500 years. This pattern is consistent with the idea that societies embarked on divergent political-economic development paths at certain critical junctures. (JEL D72, E21)

Source: American Economic Review

DOI: 10.1257/aer.98.3.808

Authors: Daron Acemoglu, Simon Johnson, James A Robinson, Pierre Yared

Institutions: Massachusetts Institute of Technology, International Monetary Fund, Harvard University, Columbia University

Language: English

Topic: Culture, Economy, and Development Studies

Subfield: Development

Field: Social Sciences

Domain: Social Sciences

SDGs: Peace, justice, and strong institutions, Reduced inequalities

Open Access status: green

Funders: Princeton University, University of Pennsylvania, University of Oklahoma, University of Cambridge