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The initiative, referendum, and distribution of income: An empirical analysis of Swiss cantons

Author

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  • Frey, Christian
  • Schaltegger, Christoph A.

Abstract

This study examines how direct democratic institutions affect income distribution before and after taxes. Based on a panel of Swiss cantons from 1945 to 2014, we test the effects of the constitutional reforms of direct democratic instruments. Our findings show that better voter access to the initiative induces policy shifts that significantly decrease top incomes and benefit the upper middle class. For the popular referendum we do not find such effects. The income effects of direct democracy are not a consequence of shifts in fiscal redistribution, but rather result from policy changes affecting pre-tax incomes.

Suggested Citation

  • Frey, Christian & Schaltegger, Christoph A., 2021. "The initiative, referendum, and distribution of income: An empirical analysis of Swiss cantons," European Journal of Political Economy, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:poleco:v:66:y:2021:i:c:s0176268020301166
    DOI: 10.1016/j.ejpoleco.2020.101968
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    Citations

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    Cited by:

    1. Diego Marino Fages, 2023. "Migration and trust: Evidence on assimilation from internal migrants," Discussion Papers 2023-08, Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP).
    2. Ahlfeldt, Gabriel M. & Maennig, Wolfgang & Mueller, Steffen Q., 2022. "The generation gap in direct democracy: Age vs. cohort effects," European Journal of Political Economy, Elsevier, vol. 72(C).
    3. Bruce Morley, 2023. "The Effects of Direct Democracy on Stock Market Risk and Returns: An Event Study from Switzerland," Risks, MDPI, vol. 11(2), pages 1-13, January.

    More about this item

    Keywords

    Direct democracy; Institutions; Inequality; Redistribution; Switzerland;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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