A Time to Plot, A Time to Reap: Coups, Regime Changes, and Inequality

ABSTRACT

A vast economic literature examines the welfare gains and distributional consequences of economic reforms, while much less is generally known on the relationship of inequality and forced regime changes. Some studies analyze how economic inequality impacts the likelihood of coups, but the distributional outcomes of such events have been largely ignored to date. Employing novel data, we find that successful coups have a significant positive impact on the consumption shares of the lowest quintile and a strong negative impact on the highest quintile, as compared to the inexistent redistribution that results from failed coups. In addition, the redistributive effect is stronger for military coups, as compared to civilian coups, and effects seem to be substantially driven by coups against democratic regimes. Despite their negative impact on overall growth and per capita income, our results show that forced regime changes, as compared to non-successful attempts, reduce inequality at a short notice. This may partially explain their continued popularity in highly unequal developing countries.

KEYWORDS:

• Coups
• regime change
• inequality
• consumption

JEL CLASSIFICATION:

• F52
• H56
• O15
• O43

Acknowledgments

We thank Andreas Bergh, Johannes Blum, and two anonymous reviewers for helpful comments on an earlier version of the paper. Bjørnskov also gratefully acknowledges financial support from the Jan Wallander and Tom Hedelius Foundation.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. A related literature examines the association of (territorial) inequality and civil conflict (Ezcurra 2019).

2. In addition, higher resource income may make it more attractive to attempt a coup d’état. Lei and Michaels (2014), for example, find empirical evidence for a conflict-increasing effect of oilfield discoveries.

3. One potential drawback of the GCIP is that its authors collect data from different income and consumption surveys to construct their dataset. For non-survey years, GCIP uses intra- and extrapolation, which implies that our variable of interest is measured with error. Throughout, except for a set of results in the appendix, this implies that all of our estimates are conservative.

4. In principle, coup success could be affected by institutional changes prior to the coup, which could for example be the case if institutional change leaves power relatively unconstrained for some time. However, we note that this is unlikely to affect our causal strategy, as Bennett, Bjørnskov, and Gohmann (2020) also find similar pre-coup trends in, e.g. political corruption and judicial constraints across failed and successful coups.

5. Very similar patterns hold for quintile 2, 3, and 4.