Can Democracy Educate a Society?

29 Pages Posted: 8 Aug 2005

See all articles by Hans Gersbach

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Research; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Lars H.R. Siemers

University of Siegen

Date Written: July 2005

Abstract

We examine the constitutional design required for democratic societies to overcome poverty traps. Restricting agenda-setting only by ensuring subsistence levels of consumption and applying simple majority voting as decision rule fails to enable a society to overcome poverty because it does not induce capital-enhancing redistribution. We show that a combination of suitable constitutional rules can, however, overcome poverty and induce economic well-being. Besides majority voting, these rules include rotating agenda-setting, agenda repetition and tax protection rules. We highlight the crucial role of democratic institutions for economic development and discuss why the evidence for democracy fostering growth is mixed.

Keywords: constitutional design, institutions, redistribution, poverty traps, tax allowances, voting rules

JEL Classification: D72, E62, H23, H53, O11

Suggested Citation

Gersbach, Hans and Siemers, Lars H.R., Can Democracy Educate a Society? (July 2005). IZA Discussion Paper No. 1693, Available at SSRN: https://ssrn.com/abstract=774025 or http://dx.doi.org/10.2139/ssrn.774025

Hans Gersbach (Contact Author)

ETH Zurich - CER-ETH -Center of Economic Research ( email )

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IZA Institute of Labor Economics

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CESifo (Center for Economic Studies and Ifo Institute)

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Centre for Economic Policy Research (CEPR)

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Lars H.R. Siemers

University of Siegen ( email )

Department of Economics
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Siegen, 57068
Germany

HOME PAGE: http://sites.google.com/site/lhsiemers/

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