UCL logo

UCL Discovery

UCL home » Library Services » Electronic resources » UCL Discovery

Inequality, fiscal capacity and the political regime: lessons from the post-communist transition

Gerry, C.J.; Mickiewicz, T.; (2006) Inequality, fiscal capacity and the political regime: lessons from the post-communist transition. (William Davidson Institute Working Papers 831). The William Davidson Institute at the University of Michigan: Michigan, US. Green open access

[img]
Preview
PDF - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
308Kb

Abstract

Using panel data for twenty-seven post-communist economies between 1987-2003, we examine the nexus of relationships between inequality, fiscal capacity (defined as the ability to raise taxes efficiently) and the political regime. Investigating the impact of political reform we find that full political freedom is associated with lower levels of income inequality. Under more oligarchic (authoritarian) regimes, the level of inequality is conditioned by the state’s fiscal capacity. Specifically, oligarchic regimes with more developed fiscal systems are able to defend the prevailing vested interests at a lower cost in terms of social injustice. This empirical finding is consistent with the model developed by Acemoglu (2006). We also find that transition countries undertaking early macroeconomic stabilisation now enjoy lower levels of inequality; we confirm that education fosters equality and the suggestion of Commander et al (1999) that larger countries are prone to higher levels of inequality.

Type:Working / discussion paper
Title:Inequality, fiscal capacity and the political regime: lessons from the post-communist transition
Open access status:An open access version is available from UCL Discovery
Publisher version:http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp831.pdf
Language:English
Keywords:Income inequality, democracy, oligarchy, fiscal capacity, economic reform, transition
UCL classification:UCL > School of Arts and Social Sciences > SSEES

View download statistics for this item

Archive Staff Only: edit this record