A Lipsetian theory of voluntary power handover

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19 November 2019

We consider an autocracy where the ruling elite control both the resource wealth and ed- ucation policies. Education prompts economic growth and enriches the budget of the elite. However, education also increases the “awareness of citizens”–capturing their reluctance to accept a dictatorship and their labor market aspirations –and forces the elite to ex- pand redistribution or handover the power. A power handover leads to a more democratic regime, where the elite retains (at least partially) its economic power. This trade-offis the backbone of our Lipsetian theory of voluntary power handover. This theory provides new insights on the positive relationship between economic development, education, and de- mocratization, and on the negative relationship between inequality and democratization. Finally, we revisit the resources-curse hypothesis within our setting