Left, Right, Left: Income and Political Dynamics in Transition Economies
AbstractThe political left turn in Latin America, which lagged its transition to liberalized market economies by a decade or more, challenges conventional economic explanations of voting behavior. While the implications of upward mobility for the political preferences of forward-looking voters have been studied, neither the upward mobility model nor conventional myopic median voter models are well equipped to explain Latin America's political transformation. This paper generalizes the forward-looking voter model to consider a broad range of dynamic processes. When voters have full information on the nature of income dynamics in a transition economy, we show that strong support for redistributive policies will materialize rapidly if income dynamics offer few prospects of upward mobility for key sections of the electorate. In contrast, when voters have imperfect information, our model predicts a slow and politically polarizing shift toward redistributive voter preferences under these same non-concave income dynamics. Simulation using fitted income dynamics for two Latin American economies suggests that the imperfect information model better accounts for the observed shift back to the left in Latin America, and that this generalized, forward-looking voter approach may offer additional insights about political dynamics in other transition economies.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1111.
Date of creation: Jan 2012
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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
income dynamics; redistributive politics; polarization; Bayesian learning; Latin America;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-18 (All new papers)
- NEP-CTA-2012-01-18 (Contract Theory & Applications)
- NEP-LAM-2012-01-18 (Central & South America)
- NEP-POL-2012-01-18 (Positive Political Economics)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Left, Right, Left: Income and Political Dynamics in Transition Economies
by Maximo Rossi in Wikiprogress América Latina on 2012-01-22 18:40:00
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