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Discussion Paper Details

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Title: Democracies Pay Higher Wages

Author(s): Dani Rodrik

Publication Date: January 1998

Keyword(s): Democracy and Wages

Programme Area(s): International Macroeconomics and International Trade and Regional Economics

Abstract: Controlling for labour productivity, income levels, and other possible determinants, there is a robust and statistically significant association between the extent of democratic rights and wages received by workers. The association exists both across countries and over time within countries. The coefficient estimates suggest that non-negligible wage improvements result from the enhancement of democratic institutions: average wages in a country like Mexico would be expected to increase by 10?30% were Mexico to attain a level of democracy comparable to that prevailing in the United States.

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Bibliographic Reference

Rodrik, D. 1998. 'Democracies Pay Higher Wages'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1776