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The Effect of Direct Democratic Institutions on Income Redistribution: Evidence for Switzerland

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Author Info

  • Feld, Lars P.

    ()
    (Alfred-Weber-Institute, Ruprecht-Karls-University of Heidelberg)

  • Fischer, Justina A.V.

    ()
    (Dept. of Economics, Stockholm School of Economics)

  • Kirchgaessner, Gebhard

    ()
    (SIAW-HSG, University of St. Gallen)

Abstract

There is an intensive dispute in political economics about the impact of institutions on income redistribution. While the main focus is on comparison between different forms of representative democracy, the influence of direct democracy on redistribution has attracted much less attention. In this paper, employing both a composite index and measures of single institutions, we find that direct democracy is particularly associated with lower welfare spending. Moreover, we estimate a model which explains the determinants of achieved redistribution measured by Gini coefficients using panel data provided by the Swiss Federal Tax Office from 1981 to 1997. While our results indicate that less public funds are used to redistribute income and actual redistribution is lower, inequality is not reduced to a lesser extent in direct than in representative democracies for a given initial income distribution.

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Bibliographic Info

Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 689.

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Length: 40 pages
Date of creation: 30 Apr 2007
Date of revision:
Handle: RePEc:hhs:hastef:0689

Note: completely revised version of CESifo working paper No. 1837, published in 2006
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Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden
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Web page: http://www.hhs.se/
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Related research

Keywords: Income Redistribution; Direct Democracy; Referendums; Initiatives;

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References

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  1. Lee, Woojin & Roemer, John E, 1998. " Income Distribution, Redistributive Politics, and Economic Growth," Journal of Economic Growth, Springer, vol. 3(3), pages 217-40, September.
  2. Torsten Persson & Guido Tabellini, 1998. "The Size and Scope of Government: Comparative Politics with Rational Politicians," NBER Working Papers 6848, National Bureau of Economic Research, Inc.
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  10. Lars P Feld & Gebhard Kirchgässner, 2001. "The political economy of direct legislation: direct democracy and local decision-making," Economic Policy, CEPR & CES & MSH, vol. 16(33), pages 329-367, October.
  11. Feld, Lars P & Kirchgassner, Gebhard, 2001. " Does Direct Democracy Reduce Public Debt? Evidence from Swiss Municipalities," Public Choice, Springer, vol. 109(3-4), pages 347-70, December.
  12. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
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  16. Jan Schnellenbach & Lars Feld & Christoph schaltegger, 2007. "The Impact of Referendums on the Centralisation of Public Goods Provision: A Political Economy Approach," Working Papers 0440, University of Heidelberg, Department of Economics, revised May 2007.
  17. Lars P. Feld & Gebhard Kirchgassner, 1999. "Public Debt and Budgetary Procedures: Top Down or Bottom Up? Some Evidence from Swiss Municipalities," NBER Chapters, in: Fiscal Institutions and Fiscal Performance, pages 151-180 National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Ilja Neustadt & Peter Zweifel, 2010. "Is the Welfare State Sustainable? Experimental Evidence on Citizens' Preferences for Redistribution," CESifo Working Paper Series 3148, CESifo Group Munich.
  2. Fischer, Justina AV, 2009. "Development of Direct Democracy in Swiss Cantons between 1997 and 2003," MPRA Paper 16140, University Library of Munich, Germany.

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