Income and Democracy: Lipset’s Law Inverted

Citation:

Bates, Robert H. 2012. “Income and Democracy: Lipset’s Law Inverted.” Oxford Centre for the Analysis of Resource Rich Economies. Oxford Centre for the Analysis of Resource Rich Economies. Copy at http://www.tinyurl.com/y2chrh6o
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Date Published:

Aug 1, 2012

Abstract:

We revisit Lipset’s law, which posits a positive and significant relationship between income and democracy. Using dynamic and heterogeneous panel data estimation techniques, we find a significant and negative relationship between income and democracy: higher/lower incomes per capita hinder/trigger democratization. We thus challenge the recent empirical literature that found no such significant relationship. We attribute this result to the nature of the tax base, and exploit additional sources of heterogeneity. Decomposing overall income per capita into its resource and non-resource components, we find that the coefficient on the latter is positive and significant while that on the former is significant but negative.

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