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Dictatorship and emigration Presentation at EITM 2007 David Hugh-Jones PhD candidate, University of Essex

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Context “The division of Europe into a number of independent states… is productive of the most beneficial consequences to the liberty of mankind.” -- Gibbon Economic interdependence has increased dramatically Exit is cheap How does this affect governments?

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Questions How does the possibility of “exit” affect characteristics and survival of dictatorial regimes? Singapore vs Zimbabwe When do dictators expel citizens? When do they prevent them leaving? Mariel boatlift vs Berlin wall

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Ideas The dictator balances 3 effects of emigration 1. Economic: alters tax base 2. Political: alters probability of successful democratic revolution 3. Political-economic: alters incentives for revolution If economy is highly interdependent then controlling emigration of skilled may increase wages of unskilled

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A framework The dictator maximizes R(t)S(t) Where R is revenue, S is probability of staying in power Solves R’S=-S’R

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A framework R’S=-S’R Write R(t) = π(t)tY(t) where π is post-migration population Y is population average income

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A framework R(t) = π(t)tY(t) So R’ = πY + π’tY + πtY’ and the dictator’s FOC is (πY + π’tY + πtY’)S = -S’ πtY or 1/t + π’/ π + Y’/Y + S’/S = 0

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A framework 1/t + π’/ π + Y’/Y+S’/S = 0 No migration: π’=0 Migration: π’<0 so LHS will be lower. To increase LHS, t must change If π(t), Y(t) and S(t) are log-concave, t must decrease e.g. if income, emigration and probability of rebellion all change faster as t increases

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Extension Y’=∂Y/∂t + ∂Y/∂π × π’ P’=∂P/∂ π × π’ + ∂P/∂Y × Y’ Now let dictator affect π independently of tax Preventing skilled emigration may increase Y, decrease P Also: distributional effects Requires more complex economy

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The model Two types of workers, Skilled and Low skilled Economy Y=f(S,L) Play: 1. Dictator chooses tax rate 2. Emigration 3. Remaining population may revolt 4. Outcomes: dictator’s or democratic tax rate

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The model Two types of workers, Skilled and Low skilled Economy Y=f(S,L) constant wages Play: 1. Dictator chooses tax rate 2. Emigration 3. Remaining population may revolt 4. Outcomes: dictator’s or democratic tax rate

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The model Two types of workers, Skilled and Low skilled Economy Y=f(S,L) constant wages Play: 1. Dictator chooses tax rate purely extractive 2. Emigration 3. Remaining population may revolt 4. Outcomes: dictator’s or democratic tax rate

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The model Two types of workers, Skilled and Low skilled Economy Y=f(S,L) constant wages Play: 1. Dictator chooses tax rate purely extractive 2. Emigration skilled only emigrate; distribution of outside wages 3. Remaining population may revolt 4. Outcomes: dictator’s or democratic tax rate

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The model Two types of workers, Skilled and Low skilled Economy Y=f(S,L) constant wages Play: 1. Dictator chooses tax rate purely extractive 2. Emigration skilled only emigrate; distribution of outside wages 3. Remaining population may revolt simple cost-benefit decision 4. Outcomes: dictator’s or democratic tax rate

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The model Two types of workers, Skilled and Low skilled Economy Y=f(S,L) constant wages Play: 1. Dictator chooses tax rate purely extractive 2. Emigration skilled only emigrate; distribution of outside wages 3. Remaining population may revolt simple cost-benefit decision 4. Outcomes: dictator’s or democratic tax rate democratic tax 0

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Questions How to model participation in revolutions? Simplest: assume probability of success is linear in number of participants (gets rid of game theory) What about the cost? Can the dictator redistribute? Simplicity vs. “realism” What happens in the democracy? Ditto

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EITM An increase in the cost of emigration increases the dictator’s extraction rate… Test: Historical data from the C19 age of migration? Proxies for “extractive tax”? Cost of emigration: integration with world economy? Rich-country immigration policy? … and (???) the probability of transitions

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Chapter 22 Immigration McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

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