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A Theory of Political Transitions

We develop a theory of political transitions inspired in part by the experiences of Western Europe and Latin America. Nondemocratic societies are controlled by a rich elite. The initially disenfranchised poor can contest power by threatening social unrest or revolution, and this may force the elite to democratize. Democracy may not consolidate because it is more redistributive than a nondemocratic regime, and this gives the elite an incentive to mount a coup. Because inequality makes democracy more costly to the elite, highly unequal cocieties are less likely to consolidate democracy and may end up oscillating between regimes or in a nondemocratic repressive regime. An unequal society is likely to experience fiscal volatility, but the relationship between inequality and redistribution is nonmonotonic; societies with intermediate levels of unequality consolidate democracy and redistribute more than both very equal and very unequal countries. We also show that asset redistribution, such as educational and land reform, may be used to consolidate both democratic and nondemocratic regimes

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Paper provided by Massachusetts Institute of Technology (MIT), Department of Economics in its series Working papers with number 99-26.

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Length: 32 pages
Date of creation: Nov 1999
Date of revision:
Handle: RePEc:mit:worpap:99-26
Contact details of provider: Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), DEPARTMENT OF ECONOMICS, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA
Phone: (617) 253-3361
Fax: (617) 253-1330
Web page: http://econ-www.mit.edu/

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  1. Wright, Randall, 1996. "Taxes, redistribution, and growth," Journal of Public Economics, Elsevier, vol. 62(3), pages 327-338, November.
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  17. Tornell, Aaron & Velasco, Andes, 1992. "The Tragedy of the Commons and Economic Growth: Why Does Capital Flow from Poor to Rich Countries?," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1208-31, December.
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  25. James Kau & Paul Rubin, 1981. "The size of government," Public Choice, Springer, vol. 37(2), pages 261-274, January.
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