during those events, iii) None of the data sets provide relevant distributional information given that they are composed of country-level aggregates, iv) Democracy is endogenous –it might be a result of many socioeconomic phenomena (omitted variables bias) and may vary between groups within countries (measurement error), v) Although many studies resort to instrumental variables to solve the problem of endogeneity, the variables related to the quality of democratic institutions relate to either a prior or subsequent redistribution of income, violating the exclusion restriction.<sup>3</sup> I assess the link between democracy and inequality using pseudo-panel data built from nine harmonized Latin American countries’ household surveys (1995-2009, biannual), conceiving withincohort inequality as a function of the accumulated level of democracy (or its stock) over longperiods of time around the cohort’s year of birth. My approach has some advantages over crosscountry studies, in that: i) I explore a relatively homogenous region, ii) surveys report the same sources of income, making surveys comparable between countries and over time, iii) I do not rely upon country-level measures of income inequality but upon cohort-level inequality (somewhat accounting for heterogeneity between groups within countries), iv) I measure democracy over long periods of time; thus, I explore the accumulated effect of historical legacies on the contemporary level of inequality.

The biggest empirical challenge to overcome in this study is endogeneity in the proxy for democracy. To address endogeneity I include a set of fixed-effects that capture gender differences, longrun and short-run country-level economic differences, long-lasting effects of colonial institutions, and changes in survey lifting. Therefore, my identification strategy, although it does not completely solve the problem of endogeneity, attenuates it considerably. Furthermore, to reassure the reader about the validity of my results I perform various robustness checks.

A number of messages emerge from this paper. First, cohorts that “experienced” long periods of quality democratic institutions have lower inequality. I find that 20 years of high quality democratic institutions could reduce the dispersion in labor income (on average) by around 17%. Second, I find suggestive evidence that this relationship is non-monotonic: The level of inequality increases with the democracy stock and then starts decreasing with long periods of quality democratic institutions. Third, cohorts that “experienced” long periods of quality democratic institutions show lower dispersion in educational attainment, and higher educational attainment. I find that 20 years of high quality democratic institutions could reduce the dispersion in the years of education (on average) by around 9%, while average educational attainment increases (on average) by 5%. These relationships also appear to be non-monotonic. These results give credence to the hypothesis that

> 3See Atkinson and Brandolini (1999), Timmons (2010), Palma (2011), Niemeyer et al. (2008), Wejnert (2005), Savoia et al. (2009), Bardhan (2005), Nikoloski (2009, 2010), Engermann and Sokoloff (1997, 2000) and Acemoglu et al. (2013) for further discussion on each of these problems.

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