Munich Personal RePEc Archive

Mechanisms that Make Economic Inequality Increase in Democratic Countries

Harashima, Taiji (2021): Mechanisms that Make Economic Inequality Increase in Democratic Countries.

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Abstract

Many empirical studies show that the level of economic inequality has worsened recently in democratic countries, which means that the majority of the electorates in these countries have agreed with, or at least not opposed, increases in economic inequality. In this paper, I show that the level of economic inequality can unintentionally and markedly increase in democratic countries because (1) households are often unable to perceive their true surrounding economic situation, (2) the primary political issue for the individual is not always to address increases in economic inequality, and (3) the government may favor a particular part of the electorate and discriminate against others. The examinations in this paper strongly suggest that democracy does not necessarily guarantee that the level of economic inequality will not significantly increase.

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