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Diversity and the Power of the Elites in Democratic Societies: A model and a test

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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. A model shows 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. In line with the theoretical predictions, the pattern of public good provision by local governments in Indonesia reveals 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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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7985.

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Date of creation: Sep 2010
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Handle: RePEc:cpr:ceprdp:7985

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Keywords: democracy; public goods;

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References

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Cited by:
  1. Bandiera, Oriana & Levy, Gilat, 2011. "Diversity and the power of the elites in democratic societies: Evidence from Indonesia," Journal of Public Economics, Elsevier, vol. 95(11), pages 1322-1330.
  2. Latika Chaudhary & Aldo Musacchio & Steven Nafziger & Se Yan, 2012. "Big BRICs, Weak Foundations: The Beginning of Public Elementary Education in Brazil, Russia, India, and China," NBER Working Papers 17852, National Bureau of Economic Research, Inc.

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