Political Kuznets curve: the effect of democratization and collective action on income distribution

Abstract

Economic inequality is often portrayed as an objective fact that can only be changed by redistributive policies. This leads economists to link inequality to other strictly economic factors – first and foremost, economic growth. This approach is based on Simon Kuznets’ famous hypothesis on the association between growth and inequality. This association has long been treated as economic in nature: after a certain level of economic development is reached, inequality begins to decline. However, in this paper, we deal with theories that refuse to consider inequality to be a purely economic phenomenon. We focus on Daron Acemoglu and James Robinson’s model that indicates the Kuznets curve having a political nature. This model treats inequality as a result of the conflict between masses and elites, and suggests searching for a strategic compromise by building democratic institutions. We investigate the model’s assumptions and through studying empirical works we indicate possible ways to advance Acemoglu and Robinson’s theory. We conclude that the model’s basic structure is sound, however, its development requires detailed case studies, not just general econometric analysis. We also claim that Acemoglu and Robinson’s model should involve a more nuanced understanding of the causes and effects of collective action both before and after democratization

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