Inequality, democracy and taxation: Lessons from the post-communist transition

Abstract

Using data for the period 1989 – 2002, we examine the determinants of income inequality in post-communist economies. We find a strong positive association between equality and tax collection but note that this relationship is significantly stronger under authoritarian regimes than under democracies. We also discover that countries introducing sustainable democratic institutions early are characterised by lower inequality. We also confirm that education fosters equality and find that larger countries are prone to higher levels of inequality.