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Diversity and the Power of the Elites in Democratic Societies: A model and a test

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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. A model shows 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. In line with the theoretical predictions, the pattern of public good provision by local governments in Indonesia reveals 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, 2010. "Diversity and the Power of the Elites in Democratic Societies: A model and a test," CEPR Discussion Papers 7985, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:7985
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    Cited by:

    1. Chaudhary, Latika & Musacchio, Aldo & Nafziger, Steven & Yan, Se, 2012. "Big BRICs, weak foundations: The beginning of public elementary education in Brazil, Russia, India, and China," Explorations in Economic History, Elsevier, vol. 49(2), pages 221-240.
    2. Pal, Sarmistha & Wahhaj, Zaki, 2017. "Fiscal decentralisation, local institutions and public good provision: evidence from Indonesia," Journal of Comparative Economics, Elsevier, vol. 45(2), pages 383-409.
    3. 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.

    More about this item

    Keywords

    democracy; public goods;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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