A Theory of Political Entrenchment

52 Pages Posted: 14 Apr 2012

See all articles by Gilles Saint-Paul

Gilles Saint-Paul

University of Toulouse I - GREMAQ-IDEI; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Davide Ticchi

Università Politecnica delle Marche; affiliation not provided to SSRN; Department of Economics and Social Sciences

Andrea Vindigni

Princeton University - Department of Political Science; Stockholm University - Institute for International Economic Studies (IIES); IZA Institute of Labor Economics

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Abstract

We develop a theory of endogenous political entrenchment in a simple two-party dynamic model of income redistribution with probabilistic voting. A partially self-interested left-wing party may implement (entrenchment) policies reducing the income of its own constituency, the lower class, in order to consolidate its future political power. Such policies increase the net gain that low-skill agents obtain from income redistribution, which only the Left (but not the Right) can credibly commit to provide, and therefore may help offsetting a potential future aggregate ideological shock averse to the left-wing party. We demonstrate that political entrenchment by the Left occurs only if incumbency rents are sufficiently high and that low-skill citizens may vote for this party even though they ratio-ally expect the adoption of these policies. We also discuss the case where the left-wing party may have the incentive to ex-ante commit to not pursue entrenchment policies once in power. Finally, we show that, in a more general framework, the entrenchment policies can be implemented also by the right-wing party. The comparative statics analyzes the effects of state capacity, a positive bias of voters for one party and income inequality on the incentives of the incumbent party to pursue entrenchment policies. The importance of our theory for constitutionally legislated term limits is also discussed. The theory sheds light on why left-wing parties or politicians often support liberal immigration policies of unskilled workers, are sometime in favor of free trade with less developed economies and of globalization more generally, or fail to reform plainly "dysfunctional" public educational systems damaging the lower classes.

Keywords: political entrenchment, constituencies, inequality, inefficient redistribution, checks and balances, political rents, state fiscal capacity

JEL Classification: D72, P16

Suggested Citation

Saint-Paul, Gilles and Ticchi, Davide and Vindigni, Andrea, A Theory of Political Entrenchment. IZA Discussion Paper No. 6473. Available at SSRN: https://ssrn.com/abstract=2039659

Gilles Saint-Paul (Contact Author)

University of Toulouse I - GREMAQ-IDEI ( email )

Manufacture des Tabacs
21 Allees de Brienne
Toulouse, 31000
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+33 5 6112 8544 (Phone)
+33 5 6122 5563 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Davide Ticchi

Università Politecnica delle Marche ( email )

Piazzale Martelli 8
Ancona, 60121
Italy

affiliation not provided to SSRN

Department of Economics and Social Sciences ( email )

Piazzale Martelli 8
Ancona, 60121
Italy

Andrea Vindigni

Princeton University - Department of Political Science ( email )

Corwin Hall
Princeton, NJ 08544-1012
United States

Stockholm University - Institute for International Economic Studies (IIES) ( email )

Stockholm, SE-10691
Sweden

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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