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Democracy and Income Inequality: Measurement and Modeling of the Western Hemispheric Experience

Abstract

What is our understanding of the relationship between democracy and income inequality in the Western Hemisphere? This paper specifies a nonlinear relationship between democracy and income inequality in multivariate non-linear models across different regions and time points of the Western Hemisphere as well as the hemisphere based on a common literature (Acemoglu and Robinson 2006, Barro 1999, Boix 2003, Burkhart 1997, Houle 2009). While the literature has rigorously tested these relationships within Latin America (Huber et al. 2006), there has not been a similar test of all of the Western Hemispheric countries, including the industrialized economies of Canada and the United States. This paper will utilize the best extant income inequality measure, the Solt (2009) corrections to the UNU-WIDER project. This comparative exercise should be instructive in both a modeling sense and a better understanding of consequences of using income inequality measures across hemispheric subregions

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