Ethnic Conflicts and the Informational Dividend of Democracy

77 Pages Posted: 17 Dec 2019

See all articles by Jeremy Laurent-Lucchetti

Jeremy Laurent-Lucchetti

University of Geneva - Department of Economics

Dominic Rohner

University of Lausanne; Centre for Economic Policy Research (CEPR)

Mathias Thoenig

University of Lausanne; Centre for Economic Policy Research (CEPR)

Date Written: December 2019

Abstract

Prevailing explanations view democracy as an institutional arrangement that solves a class conflict between a rich elite and the rest of population. We study the logic of democratic transition when ethnic tensions are more salient than the poor/rich divide. We build a simple theory where (i) ethnic groups negotiate over allocating the economic surplus and (ii) both military and political mobilizations rest on the unobserved strength of ethnic identity. By eliciting information on mobilization, free and fair elections restore inter-ethnic bargaining efficiency and prevent conflict outbreak. We show that democratic transition can be rationally chosen by autocrats, even if it involves a risk of losing power, as elections reduce the informational rent of the opposition, allowing the legitimately elected ruler to grab more economic surplus. Our setup generates new predictions on the nature of political regime, government tenure, ethnic favoritism and social unrest for ethnically divided countries - all consistent with novel country-level and ethnic group-level panel evidence on democratization in the post-decolonization period.

JEL Classification: C72, D02, D72, D74, D82, P16

Suggested Citation

Laurent-Lucchetti, Jeremy and Rohner, Dominic and Thoenig, Mathias, Ethnic Conflicts and the Informational Dividend of Democracy (December 2019). CEPR Discussion Paper No. DP14182, Available at SSRN: https://ssrn.com/abstract=3504611

Jeremy Laurent-Lucchetti (Contact Author)

University of Geneva - Department of Economics ( email )

102 Bd Carl Vogt
Geneva 4, 1211
Switzerland

Dominic Rohner

University of Lausanne ( email )

Quartier Chambronne
Lausanne, Vaud CH-1015
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Mathias Thoenig

University of Lausanne ( email )

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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