The Price of Inequality: The Influence of Rising Inequality on Democratic Decline

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Even in many well-established democracies, democratic deterioration has become a prevalent phenomenon over the past two decades. Applying different estimation techniques, the relation between inequality and the decline of democracy is examined. Overall, no definitive relation could be claimed between inequality and democracy. Although it seems clear that, for liberal democracies, the more equal ones tend to have better democracy scores, at a domestic level the correlation between inequality and democracy seems less evident. On a within-country scale, the subjective perception of inequality and of social marginalization might therefore be more influential for democratic decline than actual inequality. However, this conjecture requires further examination in future research. Furthermore, the negative relation between income inequality and democracy is partially mediated by sense of belonging. However, this result should be interpreted with certain caution since other determinants of democracy were not included in the mediation analysis. Both the quality of governance and populism were expected to have a moderating effect on the negative relation between inequality and democracy. It was found that governmental quality does not only affect democratic quality directly; the results also indicate that it may weaken the negative effect of increasing inequality. For populism, however, the results remained inconclusive.
Faculteit der Managementwetenschappen