The Interplay of Economic, Social and Political Fragmentation

27 Pages Posted: 27 Nov 2019

See all articles by Steven Bosworth

Steven Bosworth

Kiel Institute for the World Economy

Dennis Snower

Global Solutions Initiative Foundation GmbH

Date Written: 2019

Abstract

This paper examines how skill-biased growth can generate economic fragmentation (income dis-parities) that give rise to social fragmentation (the adoption of increasingly incompatible social identities and values), which generate political fragmentation (the adoption of increasingly incompatible economic policies). Our model of social fragmentation focuses on three values-driven identities: individualism (focused on status concerns), communitarianism (focused on the benefits of social affiliations), and multi-affilatedness (encompassing both individualistic and communitarian objectives). Our analysis shows how the high-, middle- and low-skilled people are drawn to individualistic, multi-affiliated and communitarian objectives, respectively. We show how skill-biased growth leads to an expansion of the individualistic and communitarian groups, at the expense of the tolerant multi-affiliates. Consequently, there is a narrowing of the moral foundations driving economic policy. We examine the conditions under which these developments increase size of the political constituency for protectionist-nationalist policies (which destroy productivity, compress the income distribution and promote the benefits of social affiliation).

Suggested Citation

Bosworth, Steven and Snower, Dennis, The Interplay of Economic, Social and Political Fragmentation (2019). CESifo Working Paper No. 7935, Available at SSRN: https://ssrn.com/abstract=3485484 or http://dx.doi.org/10.2139/ssrn.3485484

Steven Bosworth (Contact Author)

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

Dennis Snower

Global Solutions Initiative Foundation GmbH ( email )

Friedrichstraße 194 – 199
Berlin, 10117
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
99
Abstract Views
526
Rank
514,161
PlumX Metrics