Paper #896

Title:

Endogenous constitutions

Authors:

Davide Ticchi and Andrea Vindigni

Date:

February 2002 (Revised: September 2005)

Abstract:

We present a theory of the choice of alternative democratic constitutions, a majoritarian or a consensual one, in an unequal society. A majoritarian democracy redistributes resources from the collectivity toward relatively few people, and has a relatively small government and low level of taxation. A consensual democracy redistributes resources toward a broader spectrum of social groups but also has a larger government and a higher level of taxation. We show that a consensual system turns out to be preferred by society when ex ante income inequality is relatively low, while a majoritarian system is chosen when income inequality is relatively high. We also obtain that consensual democracies should be expected to be ruled more often by center-left coalitions while the right should have an advantage in majoritarian constitutions. The implications for the relationship between inequality and redistribution are discussed. Historical evidence and a cross-sectional analysis support our results.

Keywords:

Endogenous constitutions, consensual democracy, majoritarian democracy, inequality

JEL codes:

D31, D72, P16

Area of Research:

Macroeconomics and International Economics

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