Democracy under High Inequality: Political Participation and Public Goods

DEC seminar
Francesc Amat (IPEG) and Pablo Beramendi (Duke University)
2 December, 2016, 13:00h, Sala de Juntes

Contrary to the view that inequality reduces turnout, political participation among low income voters is higher in democracies with very high levels of inequality and intermediate levels of state capacity. We address this puzzle by analyzing the link between political mobilization and budget allocations at different levels of inequality and state capacity. Under high inequality and low levels of capacity, parties find it optimal to mobilize low income voters via targeted goods. But as inequality decreases and capacity increases, clientelism becomes less effective a tool for voters’ mobilization. We evaluate the implications of this argument exploiting a quasi-experiment created by the randomized anti-corruption audits by the Brazilian federal government on its municipalities. We show that an exogenous increase in monitoring effort by the state breaks the clintelistic equilibrium, leading to a joint reduction in the likelihood of re-election by incumbents, the turnout rates, and the provision of targeted goods.