Do dictatorships redistribute more?

This paper seeks to examine the effect of the political regime on fiscal redistribution for a maximum of 144 developed and developing countries between 1960 and 2010. Using data on Gini coefficients before and after government intervention allows us to apply a measure of fiscal redistribution which reflects the effect of taxes and transfers on income inequality. We find that dictatorial regimes redistribute more than democracies through taxes and transfers. Our empirical findings remain robust across several different specifications and estimation techniques. Subsequently, we employ fiscal policy data in an attempt to enlighten this puzzling - at a first glance - empirical finding. Our results indicate that democracies and dictatorships actually follow different patterns of redistribution. Dictatorships redistribute income mostly through cash transfers, whereas democratic regimes basically rely on public good services (such as health and education) and consequently redistribute income mostly through in-kind public services. We interpret our empirical findings in the context of a simple theoretical framework that builds upon McGuire and Olson (1996).