Gaming Democracy: Elite Dominance During Transition and Prospects for Redistribution

Abstract

Inequality and democracy are far more compatible empirically than predicted by social conflict theory. This paper speaks to this puzzle, identifying the scope conditions under which democratization induces greater redistribution. Because autocrats sometimes have incentives to expropriate economic elites, who lack reliable institutions to protect their rights, elites may prefer democracy to autocratic rule if they can impose roadblocks to redistribution under democracy ex ante. Using global cross-sectional time-series data (1972-2008), we find that only if elites are politically weak during transition, as when there is revolutionary pressure, is there a relationship between democracy and redistribution. Redistribution is also greater if a democratic regime can avoid adopting and operating under a constitution written by outgoing elites and instead create a new constitution that redefines the political game. This finding holds across three different measures of redistribution and instrumental variables estimation. We also document the ways in which elites “bias” democratic institutions.

Keywords: Democratization, political regimes, redistribution

JEL Classification: D7, O00, P00