Inequality, Democracy and Taxation: Lessons from the Post-Communist Transition

Using data for post-communist economies (1989-2002), we examine the determinants of income inequality. We find a strong positive association between equality and tax collection but note that this relationship is significantly stronger under authoritarian regimes than under democracies. We also discover that early macroeconomic stabilisation resulted in lower inequality; we confirm that education fosters equality and find that larger countries are prone to higher levels of inequality.