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Paper No' DEDPS 30: | Full paper
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Keywords: Property rights; revolts, income inequality.
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This Paper is published under the following series: Development Economics
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Abstract:Although property rights are the cornerstone of capitalist economics, throughout history existing claims have been frequently overturned and redefined by revolution. A fundamental question for economists is what makes revolutions more likely to occur. A large literature has found contradictory evidence for the effect of income and income inequality on revolt, possibly owing to omitted variable bias. The primary innovation of the paper is to tackle this problem by introducting a new panel data set derived from surveys of revolutionary support across one-quarter of a million randomly sampled individuals. This allows one to control for unobserved fixed effects. The regressions are based on a choice-theoretic model of revolt. After controlling for personal characteristics, country and year fixed effects, more people are found to favour revolt when inequality is high and their net incomes are low. A policy that decreases inequality equivalent to a shift from the US to Luxemburg is predicted to decrease support for revolt by 7.7 percentage points. A decrease of net income of $US 3,510 (in 1985 constant dollars) increases revolutionary support by the same amount. The results indicate that 'going for growth', or implementing policies that reduce inequality, can buy nations out of revolt.
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