One dollar, one vote

Karabarbounis, Loukas (2010): One dollar, one vote. Published in: Economic Journal , Vol. 553, No. 121 (June 2011): pp. 621-651.

Abstract

This paper revisits the relationship between inequality and redistribution in a panel of advanced OECD countries. Using panel data methods that hold constant a variety of determinants of redistributive spending, I find a non-monotonic relationship between pre-tax-and transfer distribution of income and redistribution. Relative to mean income, a more affluent rich and middle class are associated with less redistribution and a richer poor class is associated with more redistribution. These results are consistent with a one dollar, one vote politico-economic equilibrium: When the income of a group of citizens increases, aggregate redistributive policies tilt towards this group’s most preferred policies.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inequality; Distribution; Redistribution
• Subjects: H - Public Economics > H5 - National Government Expenditures and Related Policies > H50 - General; D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; P - Economic Systems > P1 - Capitalist Systems > P16 - Political Economy

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