Effects of political rivalry on public investments in education and income inequality

In this paper we intend to empirically examine the impact of political rivalry on four selected macroeconomic variables: public investments in education, school enrollment, GDP per capita and income inequality. We first construct a political rivalry indicator and examine how it varies across different groups of countries. We then perform a series of regressions and find that in lower income countries there is a significant negative impact of political rivalry on the selected variables, while in higher income countries the impact is weaker. This suggests that the channels linking political rivalry to macroeconomic variables differ with the development level.