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One dollar, one vote

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  • Karabarbounis, Loukas

Abstract

This paper revisits the relationship between inequality and redistribution in a panel of advanced OECD countries. Using panel data methods that hold constant a variety of determinants of redistributive spending, I find a non-monotonic relationship between pre-tax-and transfer distribution of income and redistribution. Relative to mean income, a more affluent rich and middle class are associated with less redistribution and a richer poor class is associated with more redistribution. These results are consistent with a one dollar, one vote politico-economic equilibrium: When the income of a group of citizens increases, aggregate redistributive policies tilt towards this group’s most preferred policies.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 25274.

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Date of creation: 21 Sep 2010
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Handle: RePEc:pra:mprapa:25274

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Keywords: Inequality; Distribution; Redistribution;

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