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Diversity and the power of the elites in democratic societies: Evidence from Indonesia

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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. Theory suggests 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. The pattern of public good provision by local governments in Indonesia is consistent with this intuition. Our analysis indeed shows 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.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:pubeco:v:95:y:2011:i:11:p:1322-1330 DOI: 10.1016/j.jpubeco.2011.04.002
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    References listed on IDEAS

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    Cited by:

    1. Schaeffer, Merlin, 2013. "Ethnic diversity, public goods provision and social cohesion: Lessons from an inconclusive literature," Discussion Papers, Research Unit: Migration, Integration, Transnationalization SP VI 2013-103, Social Science Research Center Berlin (WZB).
    2. Cendales, Andrés & Mora, Jhon & Arroyo, Santiago, 2015. "Sobre las democracias locales en el Pacífico colombiano y su incidencia en la política pública de agua potable en el periodo 2008-2011," REVISTA LECTURAS DE ECONOMÍA, UNIVERSIDAD DE ANTIOQUIA - CIE, issue 83, pages 161-192, February.
    3. Andrés Cendales & Jhon James Mora, 2015. "Precarious democracies, political negotiation and selective predation," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 30(2), pages 305-339.
    4. Luna Bellani & Heinrich Ursprung, 2016. "The Political Economy of Redistribution Policy," CESifo Working Paper Series 6189, CESifo Group Munich.
    5. Catalina Tejada & Eliana Ferrara & Henrik Kleven & Florian Blum & Oriana Bandiera & Michel Azulai, 2015. "State Effectiveness, Growth, and Development," Working Papers id:6668, eSocialSciences.

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    Keywords

    Democracy; Public goods; Elite capture; Diversity;

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