Inequality, Development, and the Stability of Democracy – Lipset and Three Critical Junctures in German History
AbstractThis paper studies the endogenous emergence of political regimes, in particular democracy, oligarchy and mass dictatorship, in societies in which productive resources are distributed unequally and institutions do not ensure political commitments. The political regime is shown to depend on resource inequality as well as on economic development, reflected in the production structure. The main results imply that for any level of development there exists a distribution of resources such that democracy is the political outcome. This distribution is even independent of the particular development level if the income share generated by the poor is sufficiently large. On the other hand, 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. Variations in inequality across several dimensions due to unbalanced technological change, immigration or changes in the demographic structure affect the scope for democracy or may even lead to its breakdown. The results are consistent with the different political regimes that emerged in Germany after its unification in 1871.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of St. Gallen, School of Economics and Political Science in its series Economics Working Paper Series with number 1127.
Length: 52 pages
Date of creation: Jul 2011
Date of revision:
Income inequality; development; democracy; coalition formation; factor endowments; demographic structure.;
Other versions of this item:
- Jung, Florian & Sunde, Uwe, 2011. "Inequality, Development, and the Stability of Democracy -Lipset and Three Critical Junctures in German History," CEPR Discussion Papers 8406, C.E.P.R. Discussion Papers.
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- H10 - Public Economics - - Structure and Scope of Government - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-13 (All new papers)
- NEP-HIS-2011-07-13 (Business, Economic & Financial History)
- NEP-POL-2011-07-13 (Positive Political Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cervellati, Matteo & Fortunato, Piergiuseppe & Sunde, Uwe, 2005.
"Hobbes to Rousseau: Inequality, Institutions, and Development,"
IZA Discussion Papers
1450, Institute for the Study of Labor (IZA).
- 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.
- Humberto Llavador & Robert J. Oxoby, 2004.
"Partisan Competition, Growth and the Franchise,"
109, Barcelona Graduate School of Economics.
- Daron Acemoglu & James A. Robinson, 2001.
"A Theory of Political Transitions,"
American Economic Review,
American Economic Association, vol. 91(4), pages 938-963, September.
- Daron Acemoglu & James Robinson, 1999. "A Theory of Political Transitions," Working papers 99-26, Massachusetts Institute of Technology (MIT), Department of Economics.
- Acemoglu, Daron & Robinson, James A, 1999. "A Theory of Political Transitions," CEPR Discussion Papers 2277, C.E.P.R. Discussion Papers.
- Acemoglu, Daron & Johnson, Simon & Robinson, James A & Yared, Pierre, 2005.
"Income and Democracy,"
CEPR Discussion Papers
5273, C.E.P.R. Discussion Papers.
- Acemoglu, Daron & Johnson, Simon & Robinson, James A & Yared, Pierre, 2007.
"Reevaluating the Modernization Hypothesis,"
CEPR Discussion Papers
6430, C.E.P.R. Discussion Papers.
- 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.
- Moreno, Diego & Wooders, John, 1996. "Coalition-Proof Equilibrium," Games and Economic Behavior, Elsevier, vol. 17(1), pages 80-112, November.
- Esteban, J. & Ray, D., 1993.
"On the Measurement of Polarization,"
UFAE and IAE Working Papers
221.93, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- 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).
- Joan-Maria Esteban & Debraj Ray, 1991. "On the Measurement of Polarization," Boston University - Institute for Economic Development 18, Boston University, Institute for Economic Development.
- Alesina, Alberto & Spolaore, Enrico, 1997.
"On the Number and Size of Nations,"
The Quarterly Journal of Economics,
MIT Press, vol. 112(4), pages 1027-56, November.
- Daron Acemoglu, 2002.
"Directed Technical Change,"
Review of Economic Studies,
Oxford University Press, vol. 69(4), pages 781-809.
- repec:bla:restud:v:75:y:2008:i:4:p:987-1009 is not listed on IDEAS
- 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.
- Dreze, J H & Greenberg, J, 1980. "Hedonic Coalitions: Optimality and Stability," Econometrica, Econometric Society, vol. 48(4), pages 987-1003, May.
- 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.
- Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2008. "Coalition Formation in Non-Democracies," Review of Economic Studies, Oxford University Press, vol. 75(4), pages 987-1009.
- repec:cup:cbooks:9780521855266 is not listed on IDEAS
- Frechette, Guillaume R. & Kagel, John H. & Morelli, Massimo, 2005. "Gamson's Law versus non-cooperative bargaining theory," Games and Economic Behavior, Elsevier, vol. 51(2), pages 365-390, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Martina Flockerzi).
If references are entirely missing, you can add them using this form.