DP8406 Inequality, Development, and the Stability of Democracy -Lipset and Three Critical Junctures in German History

Author(s): Florian Jung, Uwe Sunde
Publication Date: June 2011
Keyword(s): Coalition Formation, Democracy, Development, Income inequality
JEL(s): H10, O10, P16
Programme Areas: Development Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=8406

This paper studies the endogenous emergence of political regimes in societies in which productive resources are distributed unequally and institutions do not ensure political commitments. The results imply that for any level of development there exists a distribution of resources such that democracy emerges in equilibrium, but 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 with regard to changes in the economic and demographic environment. The results are consistent with the different political regimes that emerged in Germany after 1871.