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Political Rents, Promotion Incentives, and Support for a Non-Democratic Regime

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Valery Lazarev

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Abstract

This paper analyzes the economic foundations of a non-democratic political regime, where the ruling bureaucracy captures rents through collective control over state property and job assignment. The model developed here yields the equilibrium in the "political labor market," where the ruling bureaucracy buys services and political support of activists recruited from the working population. The underlying implicit contract requires that the incumbent bureaucrats retire after a certain time to allow for deferred promotion of activists into rent-paying positions. The major implications are that the stability of a non-democratic regime is consistent with high-income gap between the rulers and the rest of the population, strengthened when government pursues an active investment policy, and is not directly affected by public goods provision or the rate of economic growth. The results of econometric analysis of panel data from former Soviet states for the period of 1956-1968 confirm the predictions of the model.

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Paper provided by Economic Growth Center, Yale University in its series Working Papers with number 882.

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Length: 52 pages
Date of creation: Mar 2004
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Handle: RePEc:egc:wpaper:882

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Related research
Keywords: non-democratic regimes; bureaucracy; hierarchy; political support; promotion incentives; implicit contract; Soviet Union;

Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
N44 - Economic History - - Government, War, Law, and Regulation - - - Europe: 1913-
P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General

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  6. Daron Acemoglu & James A. Robinson, 2000. "Why Did The West Extend The Franchise? Democracy, Inequality, And Growth In Historical Perspective," The Quarterly Journal of Economics, MIT Press, vol. 115(4), pages 1167-1199, November. [Downloadable!] (restricted)
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  7. Valsecchi, Irene, 2000. " Job Assignment and Promotion," Journal of Economic Surveys, Blackwell Publishing, vol. 14(1), pages 31-51, February. [Downloadable!] (restricted)
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  11. Adi Schnytzer & Janez Šušteršič, 1998. "Why join the party in a one-party system?: Popularity versus political exchange," Public Choice, Springer, vol. 94(1), pages 117-134, January. [Downloadable!] (restricted)
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  13. Shleifer, Andrei & Vishny, Robert W, 1993. "Corruption," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 599-617, August. [Downloadable!] (restricted)
    Other versions:
    • Andrei Shleifer & Robert W. Vishny, 1993. "Corruption," NBER Working Papers 4372, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Harrison, Mark, 2001. "Coercion, compliance and the collapse of the soviet command economy," The Warwick Economics Research Paper Series (TWERPS) 602, University of Warwick, Department of Economics. [Downloadable!]
  15. Schnytzer, Adi & Sustersic, Janez, 1998. " Why Join the Party in a One-Party System?: Popularity versus Political Exchange," Public Choice, Springer, vol. 94(1-2), pages 117-34, January. [Downloadable!] (restricted)
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