Political labor market, government policy, and stability of a non-democratic regime

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Political labor market, government policy, and stability of a non-democratic regime

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Lazarev, Valery

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Valery Lazarev

Abstract

An important source of stability of a hierarchical non-democratic political regime, such as that of the Soviet Union in the past or China today, is the rulers’ ability to buy the services and political support of activists recruited from the working population in the monopsonistic political labor market. Implicit contracts that underlie this exchange require retirement of incumbents to allow for deferred promotion of activists into rent-paying positions. An analysis of optimal promotion contracts shows that regime stability is consistent with a high income gap between the rulers and the working population, strengthened when government pursues an active investment policy, and not affected positively by government spending on public goods. Predictions of the promotion contract model are tested using Soviet data for the period 1956 to 1968.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2352.

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Date of creation: 16 Mar 2007
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Handle: RePEc:pra:mprapa:2352

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Article
- Lazarev, Valery, 2007. "Political labor market, government policy, and stability of a non-democratic regime," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 546-563, September. [Downloadable!] (restricted)

Find related papers by JEL classification:
P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

This paper has been announced in the following NEP Reports:

NEP-ALL-2007-04-09 (All new papers)
NEP-CDM-2007-04-09 (Collective Decision-Making)
NEP-POL-2007-04-09 (Positive Political Economics)

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Eugenia Belova & Valery Lazarev, 2007. "Why party and how much? The Soviet State and the party finance," Public Choice, Springer, vol. 130(3), pages 437-456, March. [Downloadable!] (restricted)
Edward P. Lazear & Sherwin Rosen, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," NBER Working Papers 0401, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
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Georgy Egorov & Konstantin Sonin, 2004. "Dictators and Their Viziers: Agency Problems in Dictatorships," Working Papers w0043, Center for Economic and Financial Research (CEFIR). [Downloadable!]
Other versions:
- Egorov, Georgy & Sonin, Konstantin, 2004. "Dictators and Their Viziers: Agency Problems in Dictatorships," CEPR Discussion Papers 4777, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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Other versions:
- Bertocchi, Graziella & Spagat, Michael, 1999. "The Politics of Cooptation," CEPR Discussion Papers 2156, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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Other versions:
- Jody Overland, Kenneth Simons and Michael Spagat, 2003. "Political Instability and Growth in Dictatorships," Royal Holloway, University of London: Discussion Papers in Economics 03/11, Department of Economics, Royal Holloway University of London, revised Dec 2003. [Downloadable!]
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Lazarev, Valery & Gregory, Paul, 2003. "Commissars and cars: A case study in the political economy of dictatorship," Journal of Comparative Economics, Elsevier, vol. 31(1), pages 1-19, March. [Downloadable!] (restricted)
Duffy, John & Papageorgiou, Chris, 2000. " A Cross-Country Empirical Investigation of the Aggregate Production Function Specification," Journal of Economic Growth, Springer, vol. 5(1), pages 87-120, March. [Downloadable!] (restricted)
Dmitriy Gershenson & Herschel I. Grossman, 2001. "Cooption and Repression in the Soviet Union," Economics and Politics, Blackwell Publishing, vol. 13(1), pages 31-47, 03. [Downloadable!] (restricted)
Other versions:
- Dimitriy Gershenson & Herschel I. Grossman, 1999. "Cooption and Repression in the Soviet Union," Working Papers 99-25, Brown University, Department of Economics. [Downloadable!]
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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