Oligarchy, democracy, inequality and growth

François Bourguignon, Thierry Verdier

Research output: Contribution to journalArticle

Abstract

This paper analyses the dynamics of inequality, democratization and economic development in a political economy model of growth where education is both the engine of growth and a determinant of political participation. In a context with imperfect capital markets, we investigate the incentives for an educated oligarchy to subsidize the poor' education and to initiate a democratic transition. We characterize the equilibrium patterns of political institutions, income distribution and growth as a function of the initial income and inequalities. In particular, we identify circumstances under which the Elite promotes the endogenous emergence of a middle class for purely political economy reasons. A simple linear infinite horizon framework is then presented. In this setting, we discuss the importance of historical dependence for long-run social stratification and redistribution. (C) 2000 Elsevier Science B.V. All rights reserved.

Original languageEnglish (US)
Pages (from-to)285-313
Number of pages29
JournalJournal of Development Economics
Volume62
Issue number2
DOIs
StatePublished - 2000

Keywords

  • Democratization
  • Economic development
  • Inequality
  • Political economy
  • Redistribution

ASJC Scopus subject areas

  • Development
  • Economics and Econometrics

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