Inequality, Development, and the Stability of Democracy - Lipset and Three Critical Junctures in German History
Series
Economics Working Paper Series
Type
discussion paper
Date Issued
2011-07-12
Author(s)
Abstract
This 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.
Language
English
Keywords
Income inequality
development
democracy
coalition formation
factor endowments
demographic structure
HSG Classification
contribution to scientific community
Refereed
No
Publisher
School of Economics and Political Science (University of St. Gallen)
Number
1127
Start page
52
Subject(s)
Eprints ID
173053