Contents

21.1. Introduction 1886

21.2. TheoreticalConsiderations 1890

21.2.1 TheRedistributiveandEqualizingEffectsofDemocracy 1890

21.2.2 DemocracyandtheStructuralTransformation 1892

21.2.3 OtherConsiderations 1894

21.2.4 Why Inequality May Not Decline: Captured Democracy and Constraints

on Redistribution 1895

21.2.5 Why Inequality May Not Decline: Inequality-Increasing Market Opportunities 1897

21.2.6 Why Inequality May Not Decline: The Middle Class Bias 1898

21.2.7 DiscussionandInterpretation 1901

21.3.

21.3.1 Democracy, Taxes, and Redistribution 1902

21.3.2 Democracy and Inequality 1904

21.3.3 Education and Democracy 1905

21.3.4 Democracy and Health Outcomes 1907

21.3.5 The Intensive Margin 1908

21.4. Econometric Specification and Data 1909

21.4.1 Econometric Specification 1910

21.4.2 DataandDescriptiveStatistics 1913

21.5. Main Results 1918

21.5.1 The Effect of Democracy on Taxes 1918

21.5.2 The Effect of Democracy on Inequality 1928

21.5.3 Democracy and Structural Transformation 1935

21.5.4 Investigating the Mechanisms: Heterogeneity 1943

21.6. Conclusion 1953

Acknowledgments 1955

Appendix A. Comparison to Rodrik (1999) 1955

Appendix B. Results Using Other Measures of Democracy 1959

References 1960

Handbook of Income Distribution, Volume 2B

© 2015 Elsevier B.V.

All rights reserved. 1885

ISSN 1574-0056, http://dx.doi.org/10.1016/B978-0-444-59429-7.00022-4