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Income Inequality and Redistributive Government Spending

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  • International Monetary Fund

Abstract

The paper examines empirically the question of whether more unequal societies spend more on income redistribution than their more egalitarian counterparts. Theoretical arguments on this issue are inconclusive. The political economy literature suggests that redistributive spending is higher in unequal societies due to median voter preferences. Alternatively, it can be argued that unequal societies may spend less on redistribution because of capital market imperfections. Based on different data sources, the cross-country evidence reported in this paper suggests that more unequal societies do spend less on redistribution.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/14.

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Length: 25
Date of creation: 01 Jan 2003
Date of revision:
Handle: RePEc:imf:imfwpa:03/14

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Related research

Keywords: Income distribution; Government expenditures; gini coefficient; dependent variable; statistics; unequal societies; social security; equations; equation; inequality data; surveys; estimation method; samples; statistic; inequality countries; high-income countries; survey; estimation technique; correlation; correlations; high-inequality countries; skewness; income inequality data; sensitivity analysis; statistical regularity; income redistribution; black market; sample size; measure of inequality; distribution of income; redistributive policies; descriptive statistics; redistributive transfers; nonlinearity; time series; world income inequality; unequal countries; predictions; social spending; parameter estimate; polarized societies; income equality; measuring income inequality; basic descriptive statistics; reducing poverty; inequality will; inequality indicators; distributive politics; black market premium; relative position; levels of inequality; inequality regressions; standard deviation; linear trend; additional regressor; independent variables; hypothesis testing; impact of inequality; inequality coefficient;

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References

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  1. repec:fth:inadeb:404 is not listed on IDEAS
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  4. Moffitt, Robert & Ribar, David & Wilhelm, Mark, 1998. "The decline of welfare benefits in the U.S.: the role of wage inequality," Journal of Public Economics, Elsevier, vol. 68(3), pages 421-452, June.
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  10. Gouveia, Miguel & Masia, Neal A, 1998. " Does the Median Voter Model Explain the Size of Government?: Evidence from the States," Public Choice, Springer, vol. 97(1-2), pages 159-77, October.
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  17. Oded Galor & Joseph Zeira, 2013. "Income Distribution and Macroeconomics," Working Papers 2013-12, Brown University, Department of Economics.
  18. Milanovic, Branko, 1999. "Do more unequal countries redistribute more? does the median voter hypothesis hold?," Policy Research Working Paper Series 2264, The World Bank.
  19. Figini, P, 1999. "Inequality and Growth Revisited," Trinity Economics Papers 992, Trinity College Dublin, Department of Economics.
  20. Bassett, William F. & Burkett, John P. & Putterman, Louis, 1999. "Income distribution, government transfers, and the problem of unequal influence," European Journal of Political Economy, Elsevier, vol. 15(2), pages 207-228, June.
  21. Lindert, Peter H., 1996. "What Limits Social Spending?," Explorations in Economic History, Elsevier, vol. 33(1), pages 1-34, January.
  22. Partridge, Mark D, 1997. "Is Inequality Harmful for Growth? Comment," American Economic Review, American Economic Association, vol. 87(5), pages 1019-32, December.
  23. Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999. "A Data Set on Income Distribution," CEMA Working Papers 575, China Economics and Management Academy, Central University of Finance and Economics.
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