Good versus Bad Political Institutions and Economic Welfare

The paper finds that countries which practice democracy are less prone to unequal outcomes especially when it comes to wage inequality and income inequality whereas autocracy is associated with higher level of wage inequalities but its impact on income inequalities are insignificant. Though under good economic management, autocracies may redistribute incomes from the richest to the poorest, more generally an autocratic set up violates the median voter hypothesis. The results also show that political stability and voice and accountability are more sensitive to inequalities than democracy and autocracy which is to say that the countries which are politically stable and practice accountability also form more equal societies.