Political economy models predict that the rich oppose redistribution, and hence vote for conservative parties. Although this seems to fit the data well, I show that this is not true when we control for unobservable characteristics. Using Norwegian survey data, I study to what extent voting is caused by income. Unobserved characteristics correlated with income are handled by using fixed effects panel data discrete choice models. Although a positive association between income and conservative voting persists when controlling for unobservables, the magnitude of the effect is reduced by a factor of five. To correct for measurement error, I instrument income with average income by profession. The magnitude of the coefficients is increased, but the main conclusions remain.
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Paper provided by Oslo University, Department of Economics in its series Memorandum with number
02/2006.
Find related papers by JEL classification: C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
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