Public Sector Capital and the Transition from Dictatorship to Democracy

25 Pages Posted: 12 Apr 2014

See all articles by Christopher J. Ellis

Christopher J. Ellis

University of Oregon - Department of Economics

John Fender

University of Birmingham - Department of Economics

Date Written: June 2014

Abstract

A model where a dictator decides on both the level of public‐sector capital and whether to democratize is constructed. Under dictatorship the labour market is monopsonistic; democratization involves instituting a competitive labour market. Workers sometimes have a credible threat of revolution and this may affect the dictator's investment decision; it may also induce democratization. The possibility of a ‘political development trap’, where the dictator stifles development to stay in power, emerges. The model is used, inter alia, to explain the effects of the 1832 Reform Act in the UK and the worldwide positive correlation between income and democracy.

Suggested Citation

Ellis, Christopher J. and Fender, John, Public Sector Capital and the Transition from Dictatorship to Democracy (June 2014). The Manchester School, Vol. 82, Issue 3, pp. 322-346, 2014, Available at SSRN: https://ssrn.com/abstract=2424093 or http://dx.doi.org/10.1111/manc.12027

Christopher J. Ellis (Contact Author)

University of Oregon - Department of Economics ( email )

Eugene, OR 97403
United States

John Fender

University of Birmingham - Department of Economics ( email )

Economics Department
Birmingham, B15 2TT
United Kingdom

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