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Political institutions and income (re-)distribution: Evidence from developed economies

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  • Feld, Lars P.
  • Schnellenbach, Jan

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. --

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Paper provided by Walter Eucken Institut e.V. in its series Freiburg Discussion Papers on Constitutional Economics with number 13/6.

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Date of creation: 2013
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Handle: RePEc:zbw:aluord:136

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Keywords: Redistribution; Formal Institutions; Fiscal Decentralization; Presidential and Parliamentary Regimes; Electoral Systems;

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  1. Lars P. Feld & Justina A. V. Fischer & Gebhard Kirchgassner, 2006. "The effect of direct democracy on income redistribution: evidence for Switzerland," LSE Research Online Documents on Economics 19287, London School of Economics and Political Science, LSE Library.
  2. Harms, Philipp & Zink, Stefan, 2003. "Limits to redistribution in a democracy: a survey," European Journal of Political Economy, Elsevier, vol. 19(4), pages 651-668, November.
  3. John E. Roemer & Karine Van der Straeten, 2006. "The Political Economy of Xenophobia and Distribution: The Case of Denmark," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(2), pages 251-277, 07.
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  6. Randall S. Kroszner & Thomas Stratmann, 1998. "Interest Group Competition and the Organization of Congress: Theory and Evidence from Financial Services' Political Action Committees," CRSP working papers 349, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  7. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  8. 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.
  9. Sinn, Hans-Werner, . "The New Systems Competition: YRJÖ Jahnsson Lectures," Monographs in Economics, University of Munich, Department of Economics, number 19614, April.
  10. David Austen-Smith, 2000. "Redistributing Income under Proportional Representation," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1235-1269, December.
  11. Stigler, George J, 1970. "Director's Law of Public Income Redistribution," Journal of Law and Economics, University of Chicago Press, vol. 13(1), pages 1-10, April.
  12. Stefan Voigt, 2009. "Positive Constitutional Economics II—A Survey of Recent Developments," MAGKS Papers on Economics 200936, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  13. Pauly, Mark V., 1973. "Income redistribution as a local public good," Journal of Public Economics, Elsevier, vol. 2(1), pages 35-58, February.
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