Working Paper: CEPR ID: DP14182
Authors: Jérémie Laurent-Lucchetti; Dominic Rohner; Mathias Thoenig
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.
Keywords: democracy; elections; conflict; asymmetric information; ethnic identity; institutions; government tenure; political regime; ethnic favoritism
JEL Codes: C72; D02; D72; D74; D82; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| free and fair elections (K16) | prevent conflict outbreaks (F51) |
| free and fair elections (K16) | restore interethnic bargaining efficiency (D74) |
| strong ethnic identity (Z13) | bargaining failures (C78) |
| bargaining failures (C78) | potential conflict (D74) |
| autocrats choose to democratize (D70) | reduce informational rents of the opposition (D72) |
| democratic transitions (P39) | increase ethnic favoritism (J15) |
| elected leaders exploit information revealed during elections (D72) | limit resources allocated to the opposition (D72) |
| genuine democratization (D72) | incumbents retain control (G34) |