A Lipsetian theory of institutional change
Résumé
The paper addresses the role of education policies for institutional change. Our paradigmatic model consists of an autocratic elite and a mass of handto- mouth workers. The elite has full political and economic control. First, it anticipates and can avoid revolutionary threats through income redistribution. Second, it sets the education policy: a higher level of human capital results in a larger productivity of the national industry, but also in higher consumption aspirations of citizens (and thus more costly redistribution). Finally and in contrast to the recent literature on democratization games, the elite can stop the autocracy and initiate an institutional change. We show that perspective economic returns on education and resources play a crucial role: if sufficiently high, these may prompt high investment in education, human capital accumulation, and, eventually, an institutional change. Our theory of institutional change captures three essential dimensions of Lipset’s view: the positive relationship between education and institutional change, the positive relationship between income and institutional change and, in a more stylized fashion, the negative relationship between inequality and institutional change.