Income and Democracy: Lipset's Law Revisited

IMF Working Papers, December 17, 2012

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The study revisits Lipset‘s law, which posits a positive and significant relationship between income and democracy, and finds the opposite: a significant and negative relationship between income and democracy—higher/lower incomes per capita hinder/trigger democratization.
Decomposing overall income per capita into resource and non-resource components:
- The coefficient on non-resource income per capita is positive and significant.
- The coefficient on resource income per capita is significant but negative.
Conclusion: the role of resource income is central to the result that higher income per capita is associated with less democratization in this analysis.

Estimation approach: dynamic and heterogeneous panel data estimation techniques.

Distinctions between resource and non-resource income are crucial when assessing the relationship between income and democratic development.
Policies addressing democratization should consider the differing political effects of resource-based income versus non-resource-based income.

Authors: Anke Hoeffler, Robert H. Bates, Ghada Fayad
Date: December 17, 2012
Pages: 26
Volume: 2012
Issue: 295
Series: Working Paper No. 2012/295
DOI: https://doi.org/10.5089/9781475596649.001
Stock No: WPIEA2012295
ISBN: 9781475596649
ISSN: 1018-5941
Subjects: Income shocks, National income, Natural resources, Personal income
Keywords: coefficient, income, WP
Citation example provided on the page: Anke Hoeffler, Robert H. Bates, and Ghada Fayad. "Income and Democracy: Lipset's Law Revisited", IMF Working Papers 2012, 295 (2012), accessed 9/17/2026, https://doi.org/10.5089/9781475596649.001

IMF Working Paper "Income and Democracy: Lipset's Law Revisited", Working Paper No. 2012/295, DOI: https://doi.org/10.5089/9781475596649.001