Jorge Gallego and Rafal Raciborski
Clientelism, Income Inequality, and Social Preferences: an Evolutionary Approach to Poverty Traps

Abstract: Clientelism is a dyadic relation in which a politician (the patron) gives material goods and services to a citizen (the client), in exchange for political support. We argue that there's a two-way relation between clientelism and income inequality and poverty. In a poor society in which income inequality is high, clientelism will be a natural outcome. Once clientelism is established, it's harder for democracy to redistribute income and it's easier for the society to be caught in a poverty trap. We develop a two-part game-theoretic model. In the first part, clientelism emerges in a poor and unequal society as a consequence of social preferences, in particular, strong reciprocity. In the second part, using evolutionary and stochastic game theory, we show that clientelism causes income inequality and poverty.

JEL: D31, D72, C73.
Keywords: Clientelism, Income Inequality, Poverty Traps, Strong Reciprocity, Evolutionary Dynamics.



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