Social mobility and political stability

Abstract

This paper investigates the occurrence of revolutions in an economy consisting of elites and ordinary citizens. In the economy, elites obtain a disproportionate share of income and maintain their children’s status within the elite class by nepotism. Meanwhile, nepotism obstructs the path for capable individuals to enter the elite class, thereby enhancing the citizens’ relative advantage in capable manpower. In response, citizens may resort to revolutions for a larger share of national income. As the citizens’ relative advantage rises, the difficulty of launching a revolution declines; once it reaches some threshold, a revolution occurs. However, social mobility imposes institutional constraints on nepotism, thus playing a pivotal role in determining the occurrence of revolutions. In this context, we offer an explanation for the periodicity of dynasties and propose an optimal scheme to increase social mobility and prevent revolutions.