Working Paper: CEPR ID: DP3205
Authors: James A. Robinson; Thierry Verdier
Abstract: Income redistribution often takes highly inefficient forms, such as employment in the bureaucracy. We argue that this arises as an optimal political strategy in situations where politicians cannot commit to policies. Political exchanges between politicians and voters must be self-enforcing and some types of policies, particularly those generating non-excludable or irreversible benefits (such as public goods and public investment) do not generate incentives. A job is a credible, excludable and reversible method of redistribution that ties the continuation utility of a voter to the political success of a particular politician. It is thus very attractive politically even if it is socially highly inefficient. Our model provides a formalization of a style of redistributive politics known as ?clientelism?. We show that inefficient redistribution and clientelism becomes a relatively attractive political strategy in situations with high inequality and low productivity. Inefficiency is increased when (1) the ?stakes? from politics are high, (2) inequality is high, and (3) when money matters less than ideology in politics.
Keywords: income redistribution; political competition; public policy
JEL Codes: H10; H20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high inequality (D31) | attractiveness of clientelism (D72) |
| political stakes (D72) | efficiency of clientelism (D72) |
| inability to commit (D91) | reliance on job offers as redistribution (J68) |
| high inequality (D31) | inefficient forms of income redistribution (H23) |