Rewriting the Social Contract: Elite Response to Labor Unrest

Talk by Erik Hornung (University of Cologne) as part of the Research Seminar Series of the IOS Economics Department.

We study how autocratic elites modify the social contract in response to social unrest. In early 20th-century Prussia, elites were legitimized through unequal voting rights but faced mounting threats of mass mobilization. Using labor strikes as proxy for mobilization, we find that locations under greater revolutionary pressure increased spending on redistributive public goods. However, parliamentary support for franchise reform increased only when unrest coincided with public support from the enlightened elite. This correlational evidence is bolstered with placebo checks and a shift-share instrumental variable approach that relates industry-specific international commodity price changes to Prussian regions based on industry exposure.