ABSTRACT
Previous chapters have pointed to trade-offs in institutional design in the areas of social expenditures, public sector employment, government stability, bond market risk and taxation levels. Based on the above findings, a more comprehensive view of the decision costs involved in democratic institutional design has emerged. Inclusive systems - those systems producing lower levels of inequality and more equitable family policies - experience higher levels of voter turnout but are also characterized by higher taxation levels and higher bond market risk to support more spending on social expenditures. In addition, the findings of Roubini and Sachs (1989) indicate that these systems are more susceptible to budget deficits. Conversely, majoritarian systems offering less inclusive representation have more government stability and lower taxation levels but also incur higher levels of inequality and more social unrest.
