Inequality in developing economies: the role of institutional development

Amendola, Adalgiso; Easaw, Joshy; Savoia, Antonio

doi:10.1007/s11127-011-9838-3

Cited by 32 publications

(15 citation statements)

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“…As the literature suggests, differences in the type of political regimes may influence a large number of economic outcomes (Wright 2008). Moreover, further investigation could be conducted to test for democracy's channels of influence, to better understand how political institutions influence the labor income share as well as the ways in which political institutions interact with other types of institutions, formal or informal, to generate complex dynamics (Amendola et al 2013). Furthermore, as shown in the event-study evidence, not just the type of political regime, but also its stability seems to influence the labor sharetherefore, it would be interesting to further explore this relationship.…”

Section: Discussionmentioning

confidence: 99%

Democracy and the Labor Share of Income: A Cross-Country Analysis

Guerriero¹

2019

SSRN Journal

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Section: Discussionmentioning

confidence: 99%

Democracy and the Labor Share of Income: A Cross-Country Analysis

Guerriero¹

2019

SSRN Journal

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“…In line with many previous studies, the lagged value of the dependent variable, Y it-1 , is entered on the right-hand side of the estimated equation to capture the persistence in income inequality (see, e.g., Chong et al 2009;Amendola et al 2013). A problem that arises, though, is that estimates of this empirical specification produce extremely high autoregressive error structures.…”

Section: Empirical Specificationmentioning

confidence: 99%

Fiscal redistribution around elections when democracy is not “the only game in town”

Kammas

Sarantides

2016

Public Choice

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This paper seeks to examine the implications of policy intervention around elections on income inequality and fiscal redistribution. We first develop a simplified theoretical framework that allows us to examine election-cycle fiscal redistribution programs in the presence of a revolutionary threat from some groups of agents, i.e., when democracy is not ''the only game in town''. According to our theoretical analysis, when democracy is not ''the only game in town'', incumbents implement redistributive policies not only as a means of improving their reelection prospects, but also in order to signal that ''democracy works'', thereby preventing a reversion to an autocratic status quo ante at a time of the current regime's extreme vulnerability. Subsequently, focusing on 65 developed and developing countries over the 1975-2010 period, we report robust empirical evidence of pre-electoral budgetary manipulation in new democracies. Consistent with our theory, this finding is driven by political instability that induces incumbents to redistribute income-through tax and spending policies-in a relatively broader coalition of voters with the aim of consolidating the vulnerable newly established democratic regime.

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“…In general, the empirical findings of the democracy-inequality studies are mixed, divided between mostly negative and no impact, and some results are argued as not robust due to various econometric issues including endogenous of democracy, omitted variable bias, measurement error and unobserved heterogeneity. 6 Briefly, studies finding support for the inequality-reducing effect of democracy are like Balcázar (2016);Islam (2016); Reuveny and Li (2003); Lee (2005)-democracy reduces inequality only when the government size is large; Gradstein and Milanovic (2004);and Gerry and Mickiewicz (2008)-the latter two studies are on the former communist countries, but Gradstein and Milanovic only find a weak evidence; while Amendola et al (2013) and Ahmad (2016) only find an indirect negative effect of democracy on inequality via property right institutions and economic liberalization, respectively. Finally, Timmons (2010) and Acemoglu et al (2015) find no robust relationship at all between democracy and economic inequality.…”

Section: Inequality and Democracymentioning

confidence: 99%

Economic Freedom and Income Inequality: Does Political Regime Matter?

Ahmad

2017

Economies

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There is a growing literature studying the effects of economic freedom and democracy on income inequality; nevertheless, the inequality-effects of both factors are apparently studied separately. This paper revisits the income inequality-economic freedom nexus and uncovers the role of political regime in explaining the relationship. Using the latest inequality data from Standardized World Income Inequality (SWIID) version 5.0 for a sample of countries up to 115 over 1970-2014 period, and via dynamic panel GMM estimation method, an inequality model that explicitly captures the interaction effect of economic freedom and democracy is estimated. The findings demonstrate that economic freedom has positive effect on income inequality. The estimated size of inequality-increasing effects of economic freedom is substantial, ranging between 0.3% and 0.5% per annum. Nevertheless, the findings show that the freedom-induced inequality is attenuated in the presence of a democratic regime in the countries under study. Furthermore, freedom of international trade and market deregulation are shown to be the two most consistently significant liberalization policies across the baseline estimations and various sensitivity tests. The paper is concluded with some policy implications.

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Inequality in developing economies: the role of institutional development

Cited by 32 publications

References 32 publications

Democracy and the Labor Share of Income: A Cross-Country Analysis

Democracy and the Labor Share of Income: A Cross-Country Analysis

Fiscal redistribution around elections when democracy is not “the only game in town”

Economic Freedom and Income Inequality: Does Political Regime Matter?

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