1 For recent summaries of the growth evidence the reader is referred to Alesina and Perotti, 1994, Helliwell, 1994, and Przeworski and Limongi, 1993.

2 Note that we are concerned here with a within-nation inequality. The subject of the between-nations inequality (as examined in Firebaugh, 2000, for example) is outside the scope of this paper. In addition, this work focuses on the causal link from democracy to inequality only touching in passing the issue of the rverse causality. 3 Bollen and Jackman, 1985, claim that Aristotle should be credited with being the pioneer in developing the subject.

In Justman and Gradstein, 1999a, the franchise varies across periods and is endogenously determined; but for the current presentation an exogenously given constant franchise is assumed.

5 The fact that the same conclusion is supported by an alternative political model is comforting in the light of the somewhat inconclusive evidence regarding the median voter theory, on which Meltzer-Richard's model rests; see Meltzer and Richard, 1983, for a supporting view, and Gouveia and Masia, 1998, for a dissenting evidence. **6** This line of argument has been elaborated upon and tested empirically in numerous studies, but lies outside the scope of the present paper.

' Building on Olson's theory of redistributive coalitions, Weede, 1990, does find that democracy is negatively associated with the income share of the poorest quintile. 8 Although the variables associated with the financial market imperfection argument were found to have an even greater effect on inequality.

9 A question can be legitimately asked whether the calculated changes in inequality in transition economies reflect true increases in inequality. This, for two reasons. Before the transition, many consumption items were rationed and there were sizeable benefits in kind received by the elite. The actual inequality, particularly in the countries of the former Soviet Union, was greater than the recorded inequality. On the other hand, after the transition, a number of income sources is not well covered in surveys, and some of those (e.g. home consumption) may be pro-poor. Thus, the current values may exaggerate true inequality. Both points are correct but they cannot account for more than a few Gini points. The massive extent of the change in recorded inequality leaves therefore little doubt that inequality did indeed increase; in addition, we notice that even in the countries where both the pre- and post-transition Ginis were measured with the same--rather high-level of accuracy (Poland, Hungary, Czechoslovakia), inequality went up. The biases in the comparison of inequality figures before and after the transition are discussed in some detail in Milanovic (1998, Appendix 1).

**10** The Freedom House index is inverted so that its higher values show greater democracy and civil liberties.

"The regression is: Change in Gini=24.03 - 0.281 change in democracy.- 0.001 GDP in 1988 (in PPP dollars) However, neither coefficient (except the constant) is statistically significant, and R<sup>2</sup> is only 0.14.

12 The same result obtains if we use simply level of democracy in 1997 instead of cumulative democracy between 1989 and 1997.

13 We have tried several democracy formulations which are not reported here: simply change in level of democracy between 1989 and 1997, number of important 37