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Electoral Uncertainty, Income Inequality and The Middle Class

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  • Anirban Mitra
  • Shabana Mitra

Abstract

We investigate how increased electoral competition — by influencing the equilibrium policies of competing parties — affects the income distribution in society. Our model is embedded in a standard probabilistic voting setup where parties compete at two stages: (i) they allocate resources across various districts and (ii) then, for each district, they divide the resources among the different constituent groups. We show that an increase in electoral competition in a district results in a tendency towards equalization of incomes therein. We check for these relationships using data from the Indian national elections which are combined with household-level consumption expenditure data rounds from NSSO (1987-88 and 2004-05) to yield a panel of Indian districts. We find that districts which have experienced tight elections exhibit lower inequality and polarization which indicates a larger "middle class".
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Suggested Citation

  • Anirban Mitra & Shabana Mitra, 2017. "Electoral Uncertainty, Income Inequality and The Middle Class," Economic Journal, Royal Economic Society, vol. 127(602), pages 1119-1152, June.
    • Handle: RePEc:wly:econjl:v:127:y:2017:i:602:p:1119-1152
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    File URL: http://hdl.handle.net/10.1111/ecoj.2017.127.issue-602
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    Citations

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    Cited by:

    1. Bharatee Bhusana Dash & J. Stephen Ferris & Stanley L. Winer, 2018. "Measuring Electoral Competitiveness: With Application to the Indian States," Carleton Economic Papers 18-10, Carleton University, Department of Economics.
    2. Ghosh, Sugata & Mitra, Anirban, 2022. "Ethnic identities, public spending and political regimes," Journal of Comparative Economics, Elsevier, vol. 50(1), pages 256-279.
    3. Shabana Mitra & Althaf Shajahan, 2022. "Crime, elections, and political competition," Review of Development Economics, Wiley Blackwell, vol. 26(4), pages 2394-2413, November.
    4. Stanley L. Winer & J. Stephen Ferris & Bharatee Bhusana Dash & Pinaki Chakraborty, 2021. "Political competitiveness and the private–public structure of public expenditure: a model and empirics for the Indian States," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(6), pages 1430-1471, December.
    5. Satya R. Chakravarty & Manipushpak Mitra & Suresh Mutuswami & Rupayan Pal, 2020. "On the probability ratio index as a measure of electoral competition," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 6(1), pages 1-6, December.
    6. Ghosh, Sugata & Mitra, Anirban, 2016. "Ethnic Diversity, Public Spending and Political Regimes," MPRA Paper 75546, University Library of Munich, Germany.
    7. Svejnar, Jan & Hagemejer, Jan & Tyrowicz, Joanna, 2018. "Are Rushed Privatizations Substandard? Analyzing Firm-level Privatization under Fiscal Pressure," CEPR Discussion Papers 12991, Centre for Economic Policy Research.
    8. Jahen F. Rezki, 2022. "Political competition and economic performance: evidence from Indonesia," Economics of Governance, Springer, vol. 23(2), pages 83-114, June.
    9. Anirban Mitra & Shabana Mitra, 2025. "Cash for Votes: Evidence from India," Economic Development and Cultural Change, University of Chicago Press, vol. 74(1), pages 213-239.
    10. Albert Argilaga & Jijian Fan, 2022. "Optimal Policymaking under Yardstick Vote: An Experimental Study," Games, MDPI, vol. 13(3), pages 1-24, May.
    11. Kailthya, Subham & Kambhampati, Uma, 2022. "Political competition and public healthcare: Evidence from India," World Development, Elsevier, vol. 153(C).

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General

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