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Reestablishing The Income-Democracy Nexus

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Executive Summary

A number of recent papers have cast doubt on the "Modernization theory" of democratization, which posits that increases in income are conducive to increases in democracy levels. This doubt stems mainly from the fact that while a strong positive correlation exists between income and democracy levels, the relationship disappears when one controls for country fixed effects. This raises the possibility that the correlation in the data reflects a third causal characteristic, such as institutional quality. In this paper, the authors reexamine the robustness of the income-democracy relationship.

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