Social Mobility and Formation of Entry Barries on Economic Markets

This study provides the theoretical politico-economic dynamic model. It explains the changes in economic institutions of market entry barriers in democracies under the intergenerational choice of education and the corresponding social mobility. High inequality in incomes and tactical voting together give high redistribution and high entry barriers policy as a stable result in the long run. The model predicts that this situation cannot be overcome by neither the decentralized choice of future incomes of the agents, nor the government’s provision of education. Sincere voting case does not exclude the implementation of such policy either. But it asserts that this situation is not a stable-state, and is likely to be saved only for a short-time period: the decentralized optimal choice in education, followed that policy, gives the rise of another type of selectorate, which implements another policy. Moreover, centralized governmental provision of education is proved to have a negative influence on the probability of high barriers level rise.