Effects of democracy indicators on welfare: Panel data analysis on EU countries

Democracy is characterized as a concept that is dominated by the people, and it is characterized by strong institutional structures and a concept that attaches importance to individual rights and freedoms and equality. It is seen that societies that have a certain democratic culture and who have assimilated democracy have high levels of welfare and development. In order to investigate the effect of the level of democracy on welfare, European Union countries were included in the study by using data covering the period between 2007 and 2014. In this context, balanced panel data analysis has been carried out and random effects and fixed effects models are included. In the study, the Economist Democracy Index and International Property Rights Index were analyzed as independent indicators, while inflation rate, unemployment rate, public education expenditures, public health expenditures and commercial openness ratio were used as control variables. As dependent variables, GDP per capita, Human Development Index and Legatum Welfare Index were used. In this study, three different models were formed and panel data analysis was performed. The results of the analysis showed that democracy has a positive and statistically significant effect on welfare. As the level of democratization increases in the European Union countries, the level of welfare increases. Keywords: democracy, welfare, EU countries, panel data analysis.