Does Democracy Reduce Economic Ethnic Inequality?

• In Event: Outputs of Autocracy: Policy and Inequality

Abstract

While a large number of works have discussed and analyzed whether democracy reduces interpersonal economic inequality, the question of democracy’s effect on ethnic inequality remains unaddressed. This paper seeks to fill this gap. First, I present an elaborate theoretical argument that suggests two mechanisms – centered on electoral accountability and civil liberties – through which democracy reduces ethnic inequality. Second, by combining the strengths of existing indices, I develop a new measure of ethnic inequality, which, together with V-Dem’s polyarchy measure, provides a time-series, cross-national dataset covering 146 countries for 120 years. Third, using fixed effects and instrumental variable regressions, I conduct a cross-national test of the effect of democracy on ethnic inequality. The results from the empirical evaluation suggest that both the contemporary levels of democracy as well as the cumulative experiences with democracy reduce ethnic inequality to a substantive degree. These findings have important implications for social stability in heterogonous countries, in which the distribution of economic resources overlap with ethnic affiliations.

Author

• Lasse Leipziger