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A Theory of Political Entrenchment

Saint-Paul, Gilles and Ticchi, Davide and Vindigni, Andrea A Theory of Political Entrenchment. Working Paper #703/2012 Université Toulouse

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We develop a theory of endogenous political entrenchment in a simple two-party dynamic model of income redistribution with probabilistic voting. A partially self-interested left-wing party may implement (entrenchment) policies reducing the income of its own constituency, the lower class, in order to consolidate its future political power. Such policies increase the net gain that low-skill agents obtain from income redistribution, which only the Left (but not the Right) can credibly commit to provide, and therefore may help o¤setting a potential future aggregate ideological shock averse to the left-wing party. We demonstrate that political entrenchment by the Left occurs only if incumbency rents are su¢ ciently high and that low-skill citizens may vote for this party even though they rationally expect the adoption of these policies. We also discuss the case where the left-wing party may have the incentive to ex-ante commit to not pursue entrenchment policies once in power. Finally, we show that, in a more general framework, the entrenchment policies can be implemented also by the right-wing party. The comparative statics analyzes the e¤ects of state capacity, a positive bias of voters for one party and income inequality on the incentives of the incumbent party to pursue entrenchment policies. The importance of our theory for constitutionally legislated term limits is also discussed. The theory sheds light on why left-wing parties or politicians often support liberal immigration policies of unskilled workers, are sometime in favor of free trade with less developed economies and of globalization more generally, or fail to reform plainly "dysfunctional" public educational systems damaging the lower classes.

Item Type: Working Paper (Working Paper)
Uncontrolled Keywords: JEL Classification: D72, P16. Keywords: Political entrenchment; constituencies; inequality; ine¢ cient redistribution; checks and balances; political rents; state fiscal capacity.
Subjects: H Social Sciences > HB Economic Theory
J Political Science > JC Political theory
Research Area: Economics and Institutional Change
Depositing User: Ms T. Iannizzi
Date Deposited: 13 Apr 2012 15:22
Last Modified: 13 Apr 2012 15:22
URI: http://eprints.imtlucca.it/id/eprint/1262

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