Working Paper: CEPR ID: DP1776
Authors: Dani Rodrik
Abstract: Controlling for labour productivity, income levels, and other possible determinants, there is a robust and statistically significant association between the extent of democratic rights and wages received by workers. The association exists both across countries and over time within countries. The coefficient estimates suggest that non-negligible wage improvements result from the enhancement of democratic institutions: average wages in a country like Mexico would be expected to increase by 10?30% were Mexico to attain a level of democracy comparable to that prevailing in the United States.
Keywords: democracy; wages
JEL Codes: J30; H40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| democracy (D72) | workers' bargaining power (J52) |
| workers' bargaining power (J52) | wages (J31) |
| transitions to democracy (P39) | wages (J31) |
| transitions to authoritarian regimes (P39) | wages (J31) |
| democracy (D72) | wages (J31) |