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Populist policies in the transition to democracy

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  • Mejia, Daniel
  • Posada, Carlos-Esteban

Abstract

This paper develops a political economy model that provides an explanation as for why ruling elites in oligarquic societies may rely on income redistribution to the poor (the masses) in order to prevent them from attempting a revolution. We refer to this kind of redistribution as populist redistribution because, first it does not increase the poor’s productive capacity (human capital), and second it seeks to “buy” political support (peace) to perpetuate the elite’s control of political power. We examine the conditions under which ruling elites choose to deter the poor (by means of military repression and/or populist redistribution), to engage in a dispute with the poor for the control of political power, or, alternatively, to extend democracy. According to the results of the model populist redistribution (or military repression), if any, increases with initial wealth inequality and with the amount of redistribution that the poor can undertake under democracy, and decreases with the relative importance of a human capital externality in production. The model explains why in some cases the use of an apparently ine cient policy of populist redistribution turns out to be optimal for both groups (the ruling elite and the poor class) when the alternative is to use of military repression or default to conflict.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 23 (2007)
Issue (Month): 4 (December)
Pages: 932-953

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Handle: RePEc:eee:poleco:v:23:y:2007:i:4:p:932-953

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Web page: http://www.elsevier.com/locate/inca/505544

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Cited by:
  1. Jennings, Colin, 2011. "The good, the bad and the populist: A model of political agency with emotional voters," European Journal of Political Economy, Elsevier, vol. 27(4), pages 611-624.
  2. Galor, Oded, 2012. "Inequality, Human Capital Formation and the Process of Development," IZA Discussion Papers 6328, Institute for the Study of Labor (IZA).
  3. Thaize Challier, M.-Christine, 2010. "Socio-political conflict, social distance, and rent extraction in historical perspective," European Journal of Political Economy, Elsevier, vol. 26(1), pages 51-67, March.
  4. Campante, Felipe R. & Ferreira, Francisco G.H., 2004. "Inefficient lobbying, populism and oligarchy," Policy Research Working Paper Series 3240, The World Bank.
  5. Begovic, Boris & Paunovic, Marko, 2011. "Political support for enterprise restructuring and voting in Serbia," European Journal of Political Economy, Elsevier, vol. 27(1), pages 171-180, March.
  6. Oded Galor, 2009. "Inequality and Economic Development: An Overview," Working Papers 2009-3, Brown University, Department of Economics.
  7. Savoia, Antonio & Easaw, Joshy & McKay, Andrew, 2010. "Inequality, Democracy, and Institutions: A Critical Review of Recent Research," World Development, Elsevier, vol. 38(2), pages 142-154, February.

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