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The diminishing effect of democracies in diverse societies

Bandiera, Oriana and Levy, Gilat (2007) The diminishing effect of democracies in diverse societies. Oriana Bandiera and Gilat Levy. (Unpublished)

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Abstract

We propose a theoretical framework and present empirical evidence to analyze how democracy aggregates preferences when these differ both within and across wealth classes. We show that when politicians belonging to different groups can form coalitions, the wealthy elites’ influence on policy choices endogenously increases with the diversity in preferences among the poor. In line with the theoretical predictions, the pattern of public good provision and income transfer policies by local governments in Indonesia reveals that when individuals have different preferences —here due to different ethnicity— democratic policy outcomes reflect the preferences of the elites and of the ethnic minority, rather than the preferences of the poor majority.

Item Type: Monograph (Working Paper)
Additional Information: © 2007 the authors
Library of Congress subject classification: J Political Science > JA Political science (General)
Sets: Collections > Economists Online
Departments > Economics
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 24 Jun 2008 12:38
URL: http://eprints.lse.ac.uk/4819/

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