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Diversity and the power of the elites in democratic societies: Evidence from Indonesia

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  • Bandiera, Oriana
  • Levy, Gilat

Abstract

This paper analyzes whether political outcomes in local democracies are determined by the preferences of the median -typically poor-agents or whether they reflect the wishes of the wealthy elites. Theory suggests that when politicians belonging to different groups can form coalitions, the wealthy elites’ influence on policy choices is endogenously higher when there is diversity in preferences among the poor. The pattern of public good provision by local governments in Indonesia is consistent with this intuition. Our analysis indeed shows that when individuals have different preferences – here due to different ethnicities – democratic policy outcomes are closer to the preferences of the elites, rather than the preferences of the poor majority.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 95 (2011)
Issue (Month): 11 ()
Pages: 1322-1330

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Handle: RePEc:eee:pubeco:v:95:y:2011:i:11:p:1322-1330

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Web page: http://www.elsevier.com/locate/inca/505578

Related research

Keywords: Democracy; Public goods; Elite capture; Diversity;

References

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  1. Torsten Persson & Guido Tabellini, 2006. "Democratic capital: The nexus of political and economic change," Working Papers 308, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  2. Rao, Vijayendra, 2005. "Symbolic public goods and the coordination of collective action : a comparison of local development in India and Indonesia," Policy Research Working Paper Series 3685, The World Bank.
  3. Singhal, Monica & Olken, Benjamin A., 2009. "Informal Taxation," Scholarly Articles 4449108, Harvard Kennedy School of Government.
  4. Daron Acemoglu & James A. Robinson, 2006. "Persistence of Power, Elites and Institutions," NBER Working Papers 12108, National Bureau of Economic Research, Inc.
  5. Bandiera, Oriana & Levy, Gilat, 2010. "Diversity and the Power of the Elites in Democratic Societies: A model and a test," CEPR Discussion Papers 7985, C.E.P.R. Discussion Papers.
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  7. Masayuki Kudamatsu, 2007. "Has Democratization Reduced Infant Mortality in Sub-Saharan Africa? Evidence from Micro Data," ISER Discussion Paper 0685, Institute of Social and Economic Research, Osaka University.
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  9. Casey B. Mulligan & Ricard Gil & Xavier Sala-i-Martin, 2004. "Do democracies have different public policies than non-democracies?," Discussion Papers 0304-14, Columbia University, Department of Economics.
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  13. Dani Rodrik, 1998. "Democracies Pay Higher Wages," NBER Working Papers 6364, National Bureau of Economic Research, Inc.
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  15. Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods And Ethnic Divisions," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1243-1284, November.
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  17. Gilat Levy, 2005. "The Politics of Public Provision of Education," The Quarterly Journal of Economics, MIT Press, vol. 120(4), pages 1507-1534, November.
  18. Raquel Fernández & Gilat Levy, 2005. "Diversity and Redistribution," NBER Working Papers 11570, National Bureau of Economic Research, Inc.
  19. Paul Collier, 2000. "Ethnicity, Politics and Economic Performance," Economics and Politics, Wiley Blackwell, vol. 12(3), pages 225-245, November.
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Cited by:
  1. Schaeffer, Merlin, 2013. "Ethnic diversity, public goods provision and social cohesion: Lessons from an inconclusive literature," Discussion Papers, Research Unit: Migration, Integration, Transnationalization SP VI 2013-103, Social Science Research Center Berlin (WZB).

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