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Handbook of Income Distribution by Francois Bourguignon, Anthony B. Atkinson

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21.5.4 Investigating the Mechanisms: Heterogeneity

We now turn to heterogeneity in the effect of democracy on inequality. We first consider the effect of democracy interacted with the land Gini, which we take to be a measure of landed elite power, to test the “capture” channel discussed above. We show only effects on net and gross Gini for most of the interactions to save space, and then discuss the heterogeneous effects on tax to GDP and government revenue to GDP ratios in the text.

Table 21.11 shows a positive and generally significant interaction of democracy with land inequality, suggesting that the power of landed elites to capture the state or thwart any redistributive tendencies of democratization results in higher inequality. The magnitudes ...

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