Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/4181
Authors: 
Gundlach, Erich
Paldam, Martin
Year of Publication: 
2008
Series/Report no.: 
Working paper, University of Aarhus, School of Economics and Management 2008,4
Abstract: 
We consider the empirical relevance of two opposing hypotheses on the causality between income and democracy: The Democratic Transition claims that rising incomes cause a transition to democracy, whereas the Critical Junctures hypothesis denies this causal relation. Our empirical strategy is justified by Unified Growth Theory, which hypothesizes that the present international income differences have roots in the prehistoric past. Thus, we use prehistoric measures of biogeography as instruments for modern income levels, and find a large long-run causal effect of income on the degree of democracy. This result rejects the Critical Junctures hypothesis, which is an important part of the Primacy of Institutions view.
Subjects: 
democracy
unified growth theory
biogeography
Long-run growth
JEL: 
B25
O1
Document Type: 
Working Paper

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