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Which Democracies Pay Higher Wages?

By James Rockey and Miltiadis Makris


The labor share of income varies markedly across the set of democracies. A model\ud of the political process, situated in a simple macroeconomic environment is analyzed in\ud which the cause of this variation is linked to di erences in the form of democracy - in\ud particular the adoption of a presidential or parliamentary system. Presidential regimes\ud are associated with lower taxation but lower wages. Robust evidence for the negative\ud impact of a presidential system on the labor share is obtained using a Bayesian Model\ud Averaging approach. Evidence is also provided that this is due to lower taxation

Publisher: Dept. of Economics, University of Leicester
Year: 2010
OAI identifier:

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