Income Inequality, Civic Participation, and Political Instability

Although growing income inequality is often considered as a byproduct of market competition, it also has political ramifications in the form of social discontent and political instability. We posit civic participation as a mediator in the relationship between income inequality and political instability. We further demonstrate how country-level variation in institutional quality exerts a moderating impact on income inequality and political instability nexus. Our results indicate that the effect of income inequality on political stability is mediated by civil society’s participation in political processes and is conditional on the quality of institutions. This mainly applies to developing economies. In the absence of necessary institutional environment, higher income inequality triggers higher civic participation, which in turn leads to more political instability. However, when a country has sufficiently high-quality institutions, income inequality neither increases civic participation nor worsens political stability.