The Dynamics of Property Rights in Modern Autocracies

Abstract

We study a dynamic model of property appropriation in autocracies. To maintain the appearance of the rule of law, an autocrat reassigns property only when the reassignment is acceptable to all affected citizens. Nevertheless, the autocrat can appropriate public and private property by exploiting enforcement gaps. After an adjustment period, wealth shares of public property and the private property of out-groups decline. The model rationalizes the connection between wealth inequality and privatization in many autocracies. Calibrating to Russian and Chinese data, simulations to mid-twenty-first century display widening wealth gaps between elites and the populace. Anocracies mitigate this outcome. (JEL D31, D72, K11, L33, O17, P26, P36)