Working Paper: CEPR ID: DP8296
Authors: Jean-Marie Baland; James A. Robinson
Abstract: Though models of political economy suggest that changes in political institutions, such as democratization, should have large effects on policies and economic outcomes, the empirical literature finds ambiguous results. It is important, however, to ?unbundle? democratic reforms into more specific changes, for instance the introduction of secrecy of balloting, and be more specific about the mechanisms linking these to economic outcomes.To this end we develop a simple model of the economic consequences of the absence of a secret ballot. While providing workers with employment, landlords can also impose some degree of political control. When voting is not secret, landlords can dictate who their workers should vote for. As votes are used by the landlords to accumulate political rents, vote control increases the demand for labor and for land. The introduction of secret ballot should lead to a fall in the price of land in those areas where patron-client relationships and vote control were the strongest.We test the predictions of the model by examining in detail the evolution of land prices in Chile around May 31st. 1958, for which we collected original data. A characteristic of rural Chile at this time was the inquilinaje system, by which a worker, the inquilino, entered into a long term, often hereditary, employment relationship with a landlord, and lived on his landlord?s estate. We show that the introduction of the secret ballot in 1958 had implications for land prices which are perfectly consistent with the predictions of our model. Political rents represented 25% of the value of the land in Chile prior to 1958.
Keywords: Elections; Land Prices; Political Institutions
JEL Codes: D72; O54; Q15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Introduction of secret ballot in 1958 (D72) | Decrease in land prices in Chile (Q15) |
| Political control by landlords (P26) | Increase in land prices (R31) |
| Political control by landlords (P26) | Demand for labor and land (J23) |
| Demand for labor and land (J23) | Increase in land prices (R31) |
| Higher proportion of inquilinos (R21) | More significant drop in land prices post-reform (R52) |
| Political rents associated with vote control (D72) | 25% of land value prior to 1958 (R52) |