Is democracy more expropriative than dictatorship? Tocquevillian wisdom revisited

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Abstract

We reexamine the incentive effect of political democracy on the tax rate by defining a political regime over two dimensions: The extent of the franchise and the extent that the redistribution of tax revenues is biased towards the rich. Standard Tocquevillian models assume that, even if there is limited franchise, there is no redistribution bias; from this, it follows that democracy is more expropriative than oligarchy because a poorer median voter opts for higher taxes. Introducing the realistic assumption of a redistribution bias, we find a countervailing effect: Democratization decreases exploitation by the rich on the disenfranchised poor; since tax revenues are redistributed over a larger base, the median voter may gain less from redistributive taxation (we call this the Olson effect).

Original languageEnglish
Pages (from-to)155-198
Number of pages44
JournalJournal of Development Economics
Volume71
Issue number1
DOIs
Publication statusPublished - 2003 Jun

Keywords

  • Democratization
  • Elitist regime
  • Olson effect
  • Paternalistic regime
  • Political economy
  • Redistribution bias
  • de Tocqueville effect

ASJC Scopus subject areas

  • Development
  • Economics and Econometrics

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