The aim of this paper is to provide comprehensive empirical evidence on recent theories that link democracy and income inequality for the period 1960–1997. In simple cross‐country regressions I find a non‐monotonic link between democracy and inequality when using ordinary least squares, instrumental variables, and Eusufzai tests. I also employ dynamic panel data techniques, which control for potential simultaneity and heterogeneity problems. I also find support for the existence of apolitical Kuznets curve. Moreover, it appears that income inequality is unconditionally persistent. Results are robust to different democracy proxies when sensitivity analysis is applied.
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Alberto E. Chong (2004) studied this question.
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