Do increases in inequality undermine democracy? Novel quasi-experimental evidence

Recent correlational research suggests that inequality may be negatively tied to democracy, suggesting that the former degrades the latter. But almost all existing cross-national evidence remains vulnerable to endogeneity, with reverse causality and unobserved time-varying confounding being most notable. This article is the first to examine the inequality–democracy relationship using a quasi-experimental design. I identified large country-level increases in income and wealth inequality and estimated their democratic consequences with synthetic difference-in-differences. I examined whether inequality shocks reduced electoral, liberal, egalitarian, or participatory democracy. In baseline models and a long list of robustness checks, I found virtually no evidence this was so. The only exception was a possible small and very delayed negative effect of wealth (but not income) inequality on egalitarian and participatory measures of democracy within already established democracies. This result was uncertain due to multiple testing and was not robust across measures.