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Political Institutions and Income (Re-)Distribution: Evidence from Developed Economies

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  • Lars P. Feld
  • Jan Schnellenbach

Abstract

We discuss the effect of formal political institutions (electoral systems, fiscal decentralization, presidential and parliamentary regimes) on the extent and direction of income (re-) distribution. Empirical evidence is presented for a large sample of 70 economies and a panel of 13 OECD countries between 1981 and 1998. The evidence indicates that presidential regimes are associated with a less equal distribution of disposable incomes, while electoral systems have no significant effects. Fiscal competition is associated with less income redistribution and a less equal distribution of disposable incomes, but also with a more equal primary income distribution. Our evidence also is in line with earlier empirical contributions that find a positive relationship between trade openness and equality in primary and disposable incomes, as well as the overall redistributive effort.

Suggested Citation

  • Lars P. Feld & Jan Schnellenbach, 2013. "Political Institutions and Income (Re-)Distribution: Evidence from Developed Economies," CESifo Working Paper Series 4382, CESifo.
    • Handle: RePEc:ces:ceswps:_4382
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    References listed on IDEAS

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    Cited by:

    1. Fabio Padovano & Francesco Scervini & Gilberto Turati, 2016. "How do Governments Fare about Redistribution? New Evidence on the Political Economy of Redistribution," CESifo Working Paper Series 6137, CESifo.
    2. Christian Houle, 2017. "Inequality, ethnic diversity, and redistribution," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(1), pages 1-23, March.
    3. Feld, Lars P. & Frey, Christian & Schaltegger, Christoph A. & Schmid, Lukas A., 2021. "Fiscal federalism and income inequality: An empirical analysis for Switzerland," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 463-494.
    4. Domenico Rossignoli, 2015. "Too many and too much? Special-interest groups and inequality at the turn of the century," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 130(3), pages 337-366.
    5. UNDP Regional Bureau for Africa & Ayodele Odusola, "undated". "Fiscal Policy, Redistribution and Inequality in Africa," UNDP Africa Policy Notes 2017-08, United Nations Development Programme, Regional Bureau for Africa.
    6. Benoît LE MAUX & Kristýna DOSTÁLOVÁ & Fabio PADOVANO, 2017. "Ideology and Public Policies: A Quasi-Experimental Test of the Hypothesis that Left-Wing Governments Spend More," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2017-01-ccr, Condorcet Center for political Economy.
    7. Gründler, Klaus & Krieger, Tommy, 2016. "Democracy and growth: Evidence from a machine learning indicator," European Journal of Political Economy, Elsevier, vol. 45(S), pages 85-107.
    8. Odusola, Ayodele, 2017. "Fiscal Policy, Redistribution and Inequality in Africa," UNDP Africa Reports 267032, United Nations Development Programme (UNDP).
    9. Fabio Padovano & Francesco Scervini & Gilberto Turati, 2021. "Comparing governments’ efficiency at supplying income redistribution," Constitutional Political Economy, Springer, vol. 32(1), pages 68-97, March.
    10. repec:bla:afrdev:v:29:y:2017:i:s1:p:1-14 is not listed on IDEAS
    11. Simone Salotti & Carmine Trecroci, 2018. "Cross-country evidence on the distributional impact of fiscal policy," Applied Economics, Taylor & Francis Journals, vol. 50(51), pages 5521-5542, November.
    12. Nedra Baklouti & Younes Boujelbene, 2018. "Moderation of the Relationship Between Size of Government and Corruption by Democracy," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(4), pages 1210-1223, December.
    13. Lars Feld, 2014. "James Buchanan’s theory of federalism: from fiscal equity to the ideal political order," Constitutional Political Economy, Springer, vol. 25(3), pages 231-252, September.
    14. Klaus Gründler & Tommy Krieger, 2015. "Democracy and Growth: Evidence of a New Measurement," CESifo Working Paper Series 5647, CESifo.
    15. Christian Houle, 2017. "Inequality, ethnic diversity, and redistribution," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(1), pages 1-23, March.
    16. Odusola, Ayodele, 2017. "Fiscal Space, Poverty and Inequality in Africa," UNDP Africa Economists Working Papers 268726, United Nations Development Programme (UNDP).
    17. Feld Lars P. & Schmidt Christoph M., 2016. "Jenseits der schrillen Töne," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 17(2), pages 188-205, July.
    18. repec:rac:ecchap:2017-08 is not listed on IDEAS

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    More about this item

    Keywords

    redistribution; formal institutions; fiscal decentralization; presidential and parliamentary regimes; electoral systems;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General

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