Abstract
Democratization is generally expected to engender socioeconomic and political equality. However, in reality, democratization does not necessarily reduce income inequality. We investigate the reasons why democratization sometimes has a limited effect in emerging democracies. We deal with the issue of inequality reduction, paying special attention to emerging democracies and political factors. Previous studies have mainly focused on advanced democracies, and are therefore not free from the problem of selection bias. As emerging democracies outnumber advanced democracies, we need to examine emerging democracies to develop a more general theory of inequality. We specifically focus on political aspects because we are concerned with the functions of democracy. In contrast with previous studies emphasizing that the interaction between different classes determines the level of inequality, we claim that three political factors at various phases of political process complicate the process of reflecting people’s preferences in actual public policy. These factors are multidimensional preferences, the failure of the political market, and weak state capacity.
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Notes
- 1.
The coefficient is calculated on an after-tax, after-transfer basis, which is “Estimate of Gini index of inequality in equivalized (square root scale) household disposable income using Luxembourg Income Study data as the standard.” We use the term “the after-tax Gini coefficient” to indicate this Gini coefficient, which should be distinguished from “Gini market,” which is “Estimate of Gini index of inequality in equivalized (square root scale) household gross (pre-tax, pre-transfer) income using Luxembourg Income Study data as the standard.” In short, the after-tax Gini coefficient represents income inequality after government intervention.
- 2.
This only refers to the inequality level. The problem of poverty was actually alleviated. Poverty incidence in 1985 was 44.2 %, whereas that in 1991 was 39.9 % (National Statistical Coordination Board).
- 3.
The polity scores can be converted into three regime categories as “autocracies” (−10 to −6), “anocracies” (−5 to 5), and “democracies” (+6 to +10).
- 4.
We use the term “inequality reduction” in this book. This encompasses not only redistribution but also other policy framework including regulatory policies. The government has the power to design the market, and through such designing, influence the level of inequality. We consider the entire system, which is related with inequality, as the subject of research.
- 5.
- 6.
Some empirical studies have examined the new structuralist theory. Haggard and Kaufman (2012) examine the correlation between the inequality level and the probability of democratization and claim that the new structuralist argument is not supported empirically.
- 7.
A recent empirical study shows changes in preferences in accordance with changes in inequality levels based on international and US regional cross-section examinations. Kerr (2014) shows that changes in inequality are positively and significantly correlated with changes in support for government-led redistribution, after controlling for beliefs and views on social mobility. Interestingly, the study also indicates that support for redistribution increases among wealthy individuals as greater class conflict is perceived along income dimensions. This implies that perceptions of the social costs of inequality would also affect preferences concerning redistribution.
- 8.
Persson and Tabellini (2000) provide some extensions of the median voter theorem.
- 9.
Milanovic (2000) uses a limited dataset to demonstrate that empirical support for the median voter theorem is weak. Timmons (2010) claims that the correlation is not supported by more current data. Scervini (2012) shows quite ambiguous results: The “redistribution hypothesis” (greater inequality leads to higher redistribution in the aggregate) is supported by empirical tests, but the “median voter hypothesis” (the middle class plays a special role in policy making) is questioned.
- 10.
VoC classifies institutions of political economy into two types: liberal market economies (LMEs) and coordinated market economies (CMEs). Firms coordinate their activities via hierarchies and competitive market arrangements in LMEs. The equilibrium outcomes of firm behavior are usually given by demand and supply conditions in competitive markets. In CMEs, the equilibria result from strategic interaction among firms and other actors (Hall and Soskice 2001a).
- 11.
Their method of empirical examination involves neither a small nor large number but an in-between number. They select several countries from each region and compare the states of their social policy.
- 12.
Mares and Carnes (2009) extend this argument. They claim that wage earners in the formal sector are the pivotal players. Whether they form a political coalition with lower income groups or high income groups determines the type of social policy in developing countries. The main concept in this extension is the strategic alliance of the VoC.
- 13.
Wibbels and Ahlquist (2011) discuss this point clearly.
- 14.
Norris (2012) conducts empirical examinations on the impact of state capacity and confirms its effects on human development.
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Kawanaka, T., Hazama, Y. (2016). Introduction. In: Political Determinants of Income Inequality in Emerging Democracies. SpringerBriefs in Economics. Springer, Singapore. https://doi.org/10.1007/978-981-10-0257-1_1
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