Democracy and income: taking parameter heterogeneity and cross-country dependency into account

What is it about?

This paper investigates the relationship between income and democracy taking into account the fact that democracy variables are highly correlated across countries (winds of change are not country specific). Using a wider database than ever, covering annual data from 1804 to 2010 for almost all countries, we show that overall, the effect of income on democracy is significantly negative.

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Why is it important?

This paper re-launches the debate about the effect of rising income on democracy taking into account that the democratic processes are not independent from other countries (remember democratization processes after the French and American Revolutions and Arab Spring). These phenomena have been immortalized in a well-known ballad WINDS OF CHANGE (Scorpions). In fact, taking into account cross-country correlations, income rises implied less democratization and not the other way around.