泛美开发银行（IADB）：拉丁美洲地区政治和经济不平等的相互作用

IDBWORKINGPAPERSERIESN°IDB-WP-01576

TheInteractionofEconomicandPoliticalInequalityinLatinAmerica

LeopoldoFergusson

JamesA.Robinson

SantiagoTorres

Inter-AmericanDevelopmentBank

February,2024

DevelopmentBank

TheInteractionofEconomicandPoliticalInequality

inLatinAmerica

LeopoldoFergusson

JamesA.Robinson

SantiagoTorres

Inter-AmericanDevelopmentBank

February,2024

Cataloging-in-Publicationdataprovidedbythe

Inter-AmericanDevelopmentBank

FelipeHerreraLibrary

Fergusson,Leopoldo.

TheinteractionofeconomicandpoliticalinequalityinLatinAmerica/LeopoldoFergusson,JamesA.Robinson,SantiagoTorres.

p.cm.-(IDBWorkingPaperSeries;1576)

nyb-piahcrences.distribution-Colombia.3.Democratization-

Colombia.I.Robinson,JamesA.,1960-.II.Torres,Santiago.III.Inter-AmericanDevelopmentBank.SocialProtectionandHealthDivision.VI.Series.

IDB-WP-1576

JEL:D72,D78,H4,H5,P0

Keywords:politicalentry,publicpolicy,development.

Copyright◎2024Inter-AmericanDevelopmentBank.ThisworkislicensedunderaCreativeCommonsIGO3.0Attribution-NonCommercial-NoDerivatives(CC-IGOBY-NC-ND3.0IGO)license(

/licenses/by-nc

-

nd/3.0/iqo/legalcode)andmaybereproducedwithattributiontotheIDBandforanynon-commercialpurpose,asprovidedbelow.Noderivativeworkisallowed.

AnydisputerelatedtotheuseoftheworksoftheIDBthatcannotbesettledamicablyshallbesubmittedtoarbitrationpursuanttotheUNCITRALrules.TheuseoftheIDB'snameforanypurposeotherthanforattribution,andtheuseofIDB'slogoshallbe

subjecttoaseparatewrittenlicenseagreementbetweentheIDBandtheuserandisnotauthorizedaspartofthisCC-IGOlicense.

Followingapeerreviewprocess,andwithpreviouswrittenconsentbytheInter-AmericanDevelopmentBank(IDB),arevised

versionofthisworkmayalsobereproducedinanyacademicjournal,includingthoseindexedbytheAmericanEconomic

Association'sEconLit,providedthattheIDBiscreditedandthattheauthor(s)receivenoincomefromthepublication.Therefore,therestrictiontoreceiveincomefromsuchpublicationshallonlyextendtothepublication'sauthor(s).Withregardtosuch

restriction,incaseofanyinconsistencybetweentheCreativeCommonsIGO3.0Attribution-NonCommercial-NoDerivativeslicenseandthesestatements,thelattershallprevail.

Notethatlinkprovidedaboveincludesadditionaltermsandconditionsofthelicense.

TheopinionsexpressedinthispublicationarethoseoftheauthorsanddonotnecessarilyreflecttheviewsoftheInter-AmericanDevelopmentBank,itsBoardofDirectors,orthecountriestheyrepresent.

TheInteractionofEconomicandPoliticalInequalityin

LatinAmerica.*

LeopoldoFergusson†JamesA.Robinson‡SantiagoTorres§

Abstract

WeinvestigatehoweconomicinequalitycanpersistinLatinAmericainthecontextofradicalfallsinpoliticalinequalityinthelastdecades.UsingdatafromColombia,wefocusonacriticalfacetofdemocratization-theentryofnewpoliticians.Weshowthatinitiallevelsofinequalityplayasignificantroleindeterminingtheimpactofpoliticalentryonlocalinstitutions,policy,anddevelopmentoutcomes,whichcanimpactfutureinequality.Aviciouscircleemergeswherebypoliciesthatreduceinequalityarelesslikelytobeadoptedandimplementedinplaceswithrelativelyhighinequality.Wepresentevidencethatthisiscausedbothbythecaptureofnewpoliticiansandbarrierstoinstitutionandstatecapacitybuilding,andalsobythefactthatpoliticianscommittedtoredistributionarelesslikelytowininrelativelyunequalplaces.Ourresults,therefore,helptoreconcilethepersistenceofeconomicinequalitywiththenewpoliticalcontext.

Keywords:politicalentry,publicpolicy,development.

JELClassification:D72,D78,H4,H5,P0

*WewouldliketothankAndrsVelasco,AnaMaraIbez,OrazioAttanasio,AnadelaO,MarcelaMelndez,Ju-

lianMessina,thesteeringcommitteeandconferenceparticipantsatIADBLACIRconferencesinWashingtonDCandCartagena.ThisisabackgroundchapterpreparedfortheLatinAmericaandCaribbeanInequalityReview(

LACIR)

.

†UniversidaddelosAndes,FacultaddeEconoma,Cra1No18A-12,Bogot,Colombia.

lfergus-

son@.co.

Website:

‡UniversityofChicago,HarrisSchoolofPublicPolicyandDepartmentofPoliticalScience,andUniversityofNigeriaatNsukka,InstituteforAfricanStudies,1307East60thStreet,Chicago,IL60637.Email:jamesrobin-son@.Website:

/jamesrobinson.

§UniversityofChicago,HarrisSchoolofPublicPolicy,1307East60thStreet,Chicago,IL60637.Email:

stor-

resp@

1

1Introduction

Overthepast200years,LatinAmericahasdivergedeconomicallyfromNorthAmerica.Atthetimeofindependence,somepartsofthesub-continent,likeArgentinaandCuba,hadincomeper-capitalevelsclosetothoseoftheU.S.(Coatsworth,1993;Engerman&Sokoloff,1997).Today,onaverage,LatinAmericancountrieshavearound15%ofU.S.levelsofprosperity.

However,whilehistoriclevelsofdevelopmentmighthavebeensimilarinsomedimensions,

thedifferentpartsoftheAmericasdifferedquiteradicallyinatleasttwokeyothers.Thefirstisinequalityofincomesandassets.Thesecondisthedistributionofpoliticalpower.ThoughthereisanintensehistoricaldebateontheextentofcomparableeconomicinequalityintheAmericas200yearsago,1agreatdealofevidencesuggeststhatitwashigh.Forexample,theevidenceforgreaterinequalityinhumancapitalinLatinAmericaisincontrovertible.Theevidenceontheinequalityofpoliticalrightsissimilarlyclear(EngermanandSokoloff(2005)andAcemogluandRobinson(2008a)onbothofthese).Thepreponderanceofresearchsuggeststhesearecausallyrelated,withtheinequalityofpoliticalpoweroftenseenasthekeyforcingvariablecreatinginstitutionsandpoliciesthatleadtoeconomicinequality.Forexample,Garcı´a-JimenoandRobinson(2011)ar-guethatthegreaterpoliticalpowerinequalityinnineteenth-centuryLatinAmericaledtotheveryskeweddistributionoflandinfrontierexpansion.Thiseconomicinequalityfeedsbackandrein-forcestheinitialpoliticalinequalitythatcreatedit(seeAcemoglu,Johnson,andRobinson(2005)foratheoreticalframeworkthatcapturesthisfeedback).Inthismodel,policiesaredeliberatelychosentosustainpoliticalandeconomicinequality,leadingtounder-provisionofpublicgoods,suchaseducation,andconsequentiallylowratesofeconomicgrowthandeconomicdivergence(seeEngermanandSokoloff(1997),BourguignonandVerdier(2000),AcemogluandRobinson(2012)andAcemoglu,Bautista,Querubı´n,andRobinson(2008),Dell(2010)andFerraz,Finan,andMartinez-Bravo(2020)foreconometricevidence).2

TheseobservationsgenerateasignificantpuzzleincontemporaryLatinAmerica.Whileeco-nomicinequalityisstillhighandexceedinglyinertial,thesecondfactorabove,inequalityofpo-liticalpower,haschangeddramatically.ThistransformationismanifestedmostobviouslyinthedemocratizationofLatinAmerica.Figure1plotssomestandardmeasuresoftheextentofdemoc-racyfromtheVDEMproject.Nomatterthedefinition,therehavebeendramaticimprovementsin

1Thisliteraturehasfocusedonseveralthemes.OneiswhetherornotinequalityinLatinAmericawashigherinthecolonialperiod.Somestudieshaveusedprobatedatatoarguethiswasnotthecase,e.g.,JohnsonandFrank(2006).Consistentwiththis,othershavearguedthatLatinAmericabecamerelativelyunequalmuchlater,possiblyduringthewaveofglobalizationafter1850(seeCoatsworth(2008)orWilliamson(2010)),oreveninthetwentiethcentury(Bleynat,Challu´,&Segal,2021).

2Onecan,ofcourse,thinkofpurelyeconomicmechanismsviawhichinequalitycanpersist(Banerjee&Newman,1993;Galor&Zeira,1993).Nevertheless,webelievethatthepuzzleweidentifyremainsbecausetheadventofdemocracyoughttomakepolicymoreredistributive,whichshouldrelaxthetypesofliquidityconstraintsonwhichthesetheoriesrest.

2

democracysincethecollapseofmilitarydictatorshipsinthe1980sandthearrivalofdemocracyin

CentralAmericaforalmostthefirsttime.Comparedtootherworldregions,onlyEasternEuropehasexperiencedacomparablylargeandfastimprovementindemocracy(Figure2)3.Thisdemoc-ratizationalsoseemstohaveledtoagenuineentryofnewpartiesandpeoplesintothepoliticalsystem.AprominentexampleistheWorkers’PartyofBrazil,whosefirstpresident,LuizIncioLuladaSilva,wasaworking-classformermetalworkerandtradeunionist.AnotherexampleistheMovementTowardsSocialisminBolivia,whosefirstPresident,EvoMorales,wasofindige-nousorigins,aformercocafarmer,andex-headoftheCocalerostradeunion.Peoplefromclearly

non-elitebackgroundshavebeenorarepresidentsofChile,Mexico,andPer,andthepresidentof

Venezuela,NicolsMaduro,wasaformerbusdriver.Thesepeopleandthepartiestheyrepresentseemtohavegenuinelydifferentinterests,ideologies,andpolicypreferencesfromthepeopleandpartiestheyreplaced.4ThesechangesareparticularlyrelevantinaworldwherepoliticianscannotcommittopolicyasinthecitizencandidatemodelofpoliticalcompetitiondevelopedbyBesleyandCoate(1997).

IfpoliticalinequalityhasbeenthedrivingforcebehindeconomicinequalityandpovertyinLatinAmerica,whyhasthisdramaticincreaseinpoliticalequalitynotmanifestedinnewinequalityanddevelopmentdynamics?5

Whilethispuzzlehasnotbeenclearlyarticulatedbefore,thereareseveralargumentsastowhygreaterpoliticalinequalitymightnothavereducedinequalityinLatinAmerica.6Mostargumentsemphasizethatthoughpoliticalpowerhasbecomemoreequalinsomedimensions,thistransfor-mationhasbeenimperfectandinsufficientlycomprehensive,oritsconsequencescanbeoffsetviaothermechanisms.7Therefore,powerrelationshavenotchangedsubstantially;thus,neitherhave

3AppendixFiguresC-1andC-2showthatLatinAmericaisalsouniquewhenexaminingothermeasures,inpar-ticulartheincreaseintheeffectivenumberofpartiesforCongressandtherateofExecutiveturnovers.

4Theserecentchangeswereanticipatedbyprevious“populist”andanti-elitepoliticalprojects.Forexample,under

JuanDomingoPerninArgentinainthe1940s,JuanFranciscoVelascoinPerinthe1960s,andOmarTorrijosin

Panamainthe1970s.

5Thisdatarulesoutamechanismrelatedtothedirectpersistenceofthesameelites,e.g.,Stone(1992).EveninCentralAmerica,newelitesemerged,forexample,withthenineteenth-centurytake-offofthecoffeeeconomyandthetwentieth-centuryindustrializationoftheeconomy(Dosal,1995;Paige,1998).

6Undoubtedly,thesemechanismsmayapplyelsewheresincethecross-nationalevidencedoesnotsuggestthat,onaverage,democratizationleadstofallsinincomeinequality,seeAcemoglu,Naidu,Restrepo,andRobinson(2015).

7ThefirstpersontoidentifythatdemocratizationinLatinAmericawasnotcreatinganewtransformationalpoliticsbutratheratypeofperverseformofdemocracy,whathecalled“delegative”(ratherthanrepresentative)wasO’Donnell(1994).SeeAcemogluandRobinson(2008b)foramodelwheredemocratizationcanhavenoeffectontheeconomicequilibriumbecauseelitescanoffsetit.

3

policies,economicinstitutions,opportunities,and,ultimately,economicinequality.8

Weemphasizeseveralmechanismsexplainingwhydemocratizationmayfailtofosterinequality-amelioratingpolicies.Allmechanismsemergefromthefactthatasmallsubsetofpeoplecontrolsthemassofeconomicresourceswheninequalityishigh.Theyalsoundoubtedlymonopolizecul-turalcapitalandaccesstohigh-statusactivitiesandpositions.Thiscontrolallowselitestoinflu-enceandcapturenewpoliticiansandcitizens.Thiscapturemaybevoluntaryasnewelitesadapttoexistingvalues,hierarchy,andstatussystems.

Itishelpfultodistinguishbetweentwobroadclassesofmechanisms:incentivesandselection.

Concerningincentives,afirstsubsetofmechanismsstemsfromthefactthatthehigherisinequality,themorethreateningdemocracyistoelites(asintheanalysisofAcemogluandRobinson(2006)),andthegreatertheirrelativeabilitytoinfluencepolicy(seeBe´nabou(1996)).Thisinfluencemaymanifestitselfindifferentways.Thefirstandmostobviousisoutrightcorruption.Corruptinginfluencecanoccureitheratthelevelofthepoliticianoratthelevelofthevoter.Intheformercase,elitescanbribepoliticiansnottoadoptparticularpoliciesor,iftheyareadopted,nottoimplementthem.Inthelattercase,inequalitymaymakeclientelismandvotebuyingmoreattractiveandeffective,asinRobinsonandVerdier(2013)andStokes,Dunning,Nazareno,andBrusco(2013).9Second,supposeelitescaptureorcontrollocalinstitutions,forexample,statebureaucracies.Inthatcase,theymayblocktheimplementationofpoliciesdesignedtocounterinequality(seeZamosc(1986)foraColombianexampleinthecontextofagrarianreform).Third,elitesmayalsohaveanincentivetodirectlyunderminelocalstateinstitutionsthatareathreattothem(asinthemodelsofBesleyandPersson(2009)orAcemoglu,Ticchi,andVindigni(2011))sincethiswillguaranteethatpotentiallythreateningpoliciesgounimplemented.

Anothersubsetofincentivemechanismscomesfromthefactthatinequalitymaynotjustim-pactpoliticsthroughtheactionsofpre-existingelites.Itmayalsomakerent-seekingbypoliticians

8OnepossiblereasonfortheabsenceofchangeisthatinequalityinLatinAmericaissociologicalinwaysinwhichpoliticaltransitiondoesnotimpactordoessoonlyveryslowly.Manynon-politicalmechanismsmayleadtothereproductionofinequalityeveninpoliticallytransformedsocieties.Forexample,Ferna´ndez,Guner,andKnowles(2015)findthatLatinAmericancountrieshavethehighestratesofassortativematchinginthemarriagemarketsothatrichpeoplearemorelikelytomarryotherrichpeople.TheresearchofBourdieu(1984)emphasizedtheprofoundanddeeplyrootedwayshierarchyreproducesitself,extendingeventotasteinmusicandart.HisbookwillresonatewithanyonefamiliarwithLatinAmerica.HealsopointedoutthecriticalroleofschoolsinreproducinginequalityBourdieuandPasseron(1990),andrecentworkbyZimmerman(2019)hasshownhowtheschoolsysteminChileinteractswithelitestatustoreproduceinequalitypowerfully.ForColombia,Fergusson,,Ca´rdenas,andVillegas(2021)discusstheculturalimplicationsofstudyinginaprivateorpublicschoolanddemonstrateinanexperimentthatthelabormarketpenalizespublicschoolgraduates,especiallyinjobsrequiringsocialinteractionswheretheirsocialnetworks,culturalcapital,andsocialprestigemaybevaluable.Unfortunately,theapplicationoftheseideasinLatinAmericaisinitsinfancy(seeAuyero(2012)forsomeideas).

9ThereisanextensiveliteratureonpoliticalclientelisminLatinAmerica.SeealsoNichter(2018)andCalvoandMurillo(2019).

4

highlyattractive.Insteadofbeingmanipulatedbyoldelites,politicianspreyonthem.10Itisalsoplausiblethatamunicipalitywithhighlevelsofinequalitywillresultinhighlevelsofinequalityofresourcesamongstthecandidates.Ifincumbentshavefarmoreresourcesthanentrants,newcom-ersmayhavetousecertainelectoralstrategies,likeclientelism,toaccesspower.Onceinpower,thesestrategieslimittheirabilitytotransformlocalsociety.

Concerningselection,highlevelsofinequalitymayinfluencewhodecidestorunforpoliticaloffice.Forexample,supposeelite-dominatedlocalsocietiesdissuademoreeducatedorreformistpoliticiansfromrunninginthefirstplace.Thismayoccurbecausetheexistingelitecanbetterconcealcorruptpracticesinmoreunequalplaces.Interestingly,Garbiras-Dı´az(2022)shows,usingrandomauditsinBrazil,thatincreasingthevisibilityofcorruptioncanhelpovercomebarrierstoentryforoutsidercandidates.Morebroadly,inequalitymayreducethepoolofcandidateswiththeresourcestocompeteagainstthoseinpower.Eitherway,selectionbecomesachannelforreproducingthestatusquoandinequality.11

Toinvestigatethesechannels,wefollowFergusson,Robinson,andTorres(2023)whofocusonmayoralelectionsinamunicipality.Theseelectionsgiveasamplesizelargeenoughforaneconometricanalysis.Tomeasureincreaseddemocracyatthislevel,theyexaminetheentryofpeoplewithoutpreviouspoliticalexperienceintopolitics.Presumably,thisisacrucialpartofthemechanismviawhichdemocratizationissupposedtochangepolicy,enablingnewvoicestoaccesspoliticalinstitutionsandshapesuchpolicies.Theycompareplaceselecting(byasmallmargin)anewpoliticiantothosewheresomeonewhoisnotnewnarrowlywinsthemayoralelection.12

Theprimewaydemocracyimpactsinequalityisviachangesinpolicies,particularlyredistribu-tivepoliciesandtheprovisionofpublicgoods.Weexaminethreesetsofdependentvariables.Thefirstcaptureslocalpoliciesthatmayorsandthemunicipalgovernmentcontrolandimplement.

MunicipalgovernmentsinColombiashareacrucialresponsibilityineducation,healthcare,andotherlocalpublicservices.WeusethedatasetcompiledbyFergussonetal.(2023)onvariouseducationalandhealthoutcomesmeasures.ThesearealllistedinAppendixA.Forexample,weuseinformationonprimaryandsecondaryschoolenrollment,theteacher/pupilratio,andnationaltestscoresforeducation.Forhealth,weexamineinfantmortality,thepercentageofunderweightbabies,thegovernment’ssubsidizedhealthinsurancecoverage,andthenumberofhealthfacilitiespercapita.Publicservicesincludethecoverageofaqueducts,electricity,sewage,naturalgas,andinternetpenetration.InColombia,perhapsthemostbasicpublicgoodissecurity.Wemeasurethis

10IntheColombiancase,asalientexampleofthismightbetheCarruseldelacontratacinorganizedbySamuelMorenoafterhebecamemayorofBogotin2010(seeRomero(2013)).

11SeveralauthorshaveexamineddirectfinancialincentivesasasourceofpoliticalselectioninLatinAmerica(e.g.,

FerrazandFinan(2009)andPique´(2019)forBrazilandPer).

12Technically,theyconductaregressiondiscontinuityanalysis.Thehypothesisisthatbyfocusingoncloseelec-tions,thefactthatamunicipalityelectedanewpersonratherthananoldoneisidiosyncraticandunrelatedtoothermunicipalfeaturesthatmightimpacttheadoptionorimplementationofpolicies.

5

usingdataonthefts,kidnappings,murders,andforceddisplacement,allnormalized.Finally,inthissetofoutcomes,weexamineeconomicdevelopmentmeasures.Weusemeannighttimelight,municipalvalue-addedpercapita,andthelocalemploymentrate.

OursecondsetofoutcomescomesfrominformationcollectedbytheDANE,theColombian

NationalStatisticsInstitute(DepartamentoAdministrativoNacionaldeEstadstica),onfourin-

dicesofthefunctioningoflocalstateinstitutions.TheDANEcompiledinformationontheeffi-ciencyandefficacyoflocalstateinstitutions.Efficiencyapproximatesthelocalpublicsector’s‘totalfactorproductivity,’capturingtherelationshipbetweenservicesprovidedandtheinputsused.Efficacymeasurestheextenttowhichaparticularactiongeneratesthedesiredoutcome.TheDANEalsomeasuredmanagementpractices,whichcapturestheextentofbureaucratizationandprofessionalizationofthelocalstate.Finally,theycollectedinformationonfiscalperfor-mance,whichcaptureshoweffectivelyfiscalinstitutionswork(whetherthelocalbudgetisbal-anced,whetherlawsrelatingtoexpenditurelimitsareobeyed,andwhetherthedebtisproperlyserviced).Additionally,weexaminemeasuresofcorruptionaccusationsandprosecutions.

TheDANE’sindicesoffiscalperformanceandmanagementpractices,introducedabove,areparticularlyinterestingbecausetheyallowustodiscussthedifferencebetweenpolicychangesandpolicyimplementationdirectly.Mostofourdataareonpolicyoutcomes(thepupil-teacherratioinschools,forexample),soitisdifficulttodistinguishbetweentheconceptuallydistinctsituationswhereapolicyisadoptedandnotimplementedandthosewhereapolicyisnotadoptedinthefirstplace.Tosomeextent,fiscalperformanceandmanagementpracticescapturepolicychangesunderamayor’scontrol.Thus,ifoneseestheseindicesimprovingbutnochangeinotherpolicyoutcomes,thissuggestsapolicychangewhoseimplementationfailsorisblocked.Thispatternwouldnotsupportsomeofthehypothesesabove,forexample,theideathatnewcomersbehavelikeincumbentstowinandretainpoweroradaptthemselvestosomestatusquosystemsofvaluesorhierarchies.

Finally,thethirdsetofoutcomescoversdifferentdimensionsofcorruption.Weexaminethenumberofformalcomplaintsandsanctionsissuedagainstmayors,usinginformationgathered

fromtheSIRIplatformofthe“ProcuraduraGeneraldelaNacin”,thenationalwatchdogagency.

Thebasicpredictionoftheabovemechanismsisthatgreaterdemocracyandpoliticalequalitymayaccompanyunchangedredistributivepolicyandinstitutionsand,ultimately,unchangedeco-nomicinequalityonaverage.Nevertheless,themechanismsarealsoconsiderablyheterogeneous,whichweexploittotesttheirrelevance.First,inplaceswithgreaterinitiallevelsofinequality,theaboveargumentssuggestthateliteshavemoresubstantialincentivesandtheabilitytoinfluencepolicychoices.Hence,suchplacesshouldhavemorepoliticalcorruptionandclientelismaselitesmakegreatereffortstoguaranteetheirinterestsarenotthreatened.Second,elitesshouldhavestrongerincentivestoblockpolicyimplementationinhighlyunequalplacesthroughtheirlinksto

6

thelocalstate.Third,weexpectthatinplaceswithhighinequality,elitesattempttounderminelocalinstitutionstoensuretheydonotimplementpoliciesagainsttheirinterests.Finally,throughtheselectionchannel,highinequalityshouldalsoimpactwhorunsforpoliticaloffice.Forexam-ple,onemightconjecturethatthiswouldleadtomoremoderatecandidatessinceradicalswouldhavelittlechanceofwinninginthefaceofentrenchedeliteinterestsandpower.

Wefocushereonheterogeneityconcerninginitiallevelsofinequalitybecauseofthepaper’sfo-cusonthereproductionofinequalityinthefaceofdemocratizationandfallingpoliticalinequality.Fergussonetal.(2023)investigatemuchmorebroadlytheconditionaleffectsofdemocratizationandwhattheycallthe“ConditionalIronLawofOligarchy”.Theydeveloptheideathatincreaseddemocracywhileleadingtotheentryofnewpoliticalforcesandpeople,haspotentiallydivergingimpactsdependingonthecontext.Intheirpaper,theyshowinparticularthatinitiallevelsofor-derandstatecapacityinfluencewhetherornotdemocracyistransformative.Thefactthatitmaynotbeisdue,asinthesociologicaltheoriesfromwhichtheirtitlecomes,tothereproductionofelites:newdemocraticentrantsbecomenewelites,replacingoldoneswithlittlechangeinpolicyoroutcomes.Ratherthanatoolofpoliticalinclusion,democracybecomesmoreofamechanismforelitecirculation.Ourmaincontributionistousetheirframeworktostudyinitiallevelsofeconomicinequalityasacontextualfactorandshowthattheirresultsapplytherealso.

Ourevidenceshowspatternsconsistentwithmanyofthehypotheseswesketchabove.First,littlehappensonaverageintheshortruntomostpolicyoutcomeswhenanewpoliticiancomestopower.Thereisnoimprovementineconomicdevelopmentandcorruptionoutcomes,andtheonlyimprovementinpolicyisforeducation.Healthpolicyoutcomesevendeteriorateonaverage,whileotherpublicservicesarenodifferentinmunicipalitieswhereanewcomerwins,asopposedtoonewhereanewcomerloses.

Second,concerninginstitutionalperformance,wefindminorpositiveeffectsofnewcomersonanindexthataggregatesallthemeasuresfromDANE,drivenbyanimpactonitscomponentsoffiscalperformance,efficacy,andmanagementpractices.Theseresultsareconsistentwithde-mocratizationandgreaterpoliticalequalityhavinglittle,oronlyamodest,effectonpolicyandinequality.Thesefindingsareinterestingsince,aswestressed,onecanthinkoffiscalperformanceandmanagementpracticesasdirectlymeasuringpolicyadoption,independentofimplementation.Totheextentthatefficacyalsoincreases,thereissomeevidencethatbetterpoliciesarebothchosenandapplied.

Third,thereislittleevidencefordecreasesincorruptiononaveragewhenanewpoliticiancomestooffice.Thereisnodecreaseinthelikelihoodthatamayorwillbewarned,sanctioned,suspended,removed,disqualifiedfromoffice,orimprisoned.

Moreinterestingly,however,thereisconsiderableheterogeneityintheimpactofnewcomersdependingontheinitiallevelsofinequality.WemeasurethislevelofinequalityviatheGinicoef-

7

ficientcalculatedatthemunicipalitylevelfromthe1993ColombiannationalcensusandEncuestadeCalidaddeVida.Municipalitieswithbelow-medianinequalitycompletelydrivethepositiveeffectoneducation.Thenegativeimpactonhealthpolicygoesawayintheserelativelymoreequalmunicipalities.Thedifferencesbetweenhigh-andlow-inequalitymunicipalitiesalsodrivethemeasuresofinstitutionalperformance.Municipalitieswithrelativelylowlevelsofinequalityac-countforalloftheaverageshort-runimprovementswementionedabove.Finally,forcorruption,mayorsoflow-inequalitymunicipalitiesarelesslikelytobedisqualifiedforpublicoffice.Atthesametime,thoseinhighlyunequalplacesaremorelikelytobesanctionedandimprisonedforcorruption.

Theseresultssuggestthatnewcomershavedifferentpolicypreferencesfromexistingpoliticalelites,butwhetherornottheychooseormanagetoimplementdifferentpoliciesdependsontheinitiallevelofinequality.Indeed,ifweconsiderfiscalperformanceandmanagementpracticesasmeasuresofpolicyadoption,thesedonotchangein