Democracy, income and pollution

Abstract

Empirical evidence suggests that increased democracy reduces pollu- tion. Using a median-voter model (where a democratization reform typically changes the income of the median voter), we analyze how the effect of a change of the individual income differs from the effect of a change in the economy-wide productivity in the determination of pollution. We find that a democratization reform that brings poorer groups into the franchise leads to lower pollution only if the elasticity of the marginal utility of consumption, r, is smaller than unity. At the same time, the EKC literature suggests that a country tends to improve aspects of the environment as its per capita income rises, at least when it is above some critical level. For the model to be consistent with this observation, when r \ 1, the transformation function between income and pollution must be generous, i.e. little income has to be given up as pollution is reduced.