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Inequality, Development, and the Stability of Democracy -Lipset and Three Critical Junctures in German History

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  • Jung, Florian
  • Sunde, Uwe

Abstract

This paper studies the endogenous emergence of political regimes in societies in which productive resources are distributed unequally and institutions do not ensure political commitments. The results imply that for any level of development there exists a distribution of resources such that democracy emerges in equilibrium, but there are distributions of resources for which democracy is infeasible in equilibrium irrespective of the level of development. The model also delivers results on the stability of democracy with regard to changes in the economic and demographic environment. The results are consistent with the different political regimes that emerged in Germany after 1871.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8406.

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Date of creation: Jun 2011
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Handle: RePEc:cpr:ceprdp:8406

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Keywords: Coalition Formation; Democracy; Development; Income inequality;

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  1. Humberto Llavador & Robert Oxoby, 2003. "Partisan competition, growth and the franchise," Economics Working Papers 730, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2004.
  2. Esteban, J.M. & Ray, D., 1992. "On the Measurement of Polarization," UFAE and IAE Working Papers 171.92, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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  4. Alberto Alesina & Enrico Spolaore, 1995. "On the Number and Size of Nations," NBER Working Papers 5050, National Bureau of Economic Research, Inc.
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  8. Morrisson, Christian, 2000. "Historical perspectives on income distribution: The case of Europe," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 4, pages 217-260 Elsevier.
  9. Matteo Cervellati & Piergiuseppe Fortunato & Uwe Sunde, 2008. "Hobbes to Rousseau: Inequality, Institutions and Development," Economic Journal, Royal Economic Society, vol. 118(531), pages 1354-1384, 08.
  10. Daron Acemoglu & Simon Johnson & James Robinson & Pierre Yared, 2005. "Income and Democracy," NBER Working Papers 11205, National Bureau of Economic Research, Inc.
  11. Daron Acemoglu & Simon Johnson & James A. Robinson & Pierre Yared, 2007. "Reevaluating the Modernization Hypothesis," NBER Working Papers 13334, National Bureau of Economic Research, Inc.
  12. Cervellati, Matteo & Fortunato, Piergiuseppe & Sunde, Uwe, 2008. "Hobbes to rousseau: Inequality, institutions and development," Munich Reprints in Economics 20088, University of Munich, Department of Economics.
  13. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
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  16. Moreno, Diego & Wooders, John, 1996. "Coalition-Proof Equilibrium," Games and Economic Behavior, Elsevier, vol. 17(1), pages 80-112, November.
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