Electoral systems and income inequality: a tale of political equality (original) (raw)
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Electoral Systems and Economic Inequality : A Tale of Political Equality ∗
2017
Do electoral institutions have an effect on income inequality? Does political inequality play a role in the potential aftermath of electoral rules on income inequality? This paper provides a Downsian model of political competition in which electoral systems represent differently the individuals’ preferences of income inequality. Empirically, I employ a panel data of 118 democracies during 1960-2015, and find that proportional systems might improve income inequality through its interaction with political equality. Unpacking this mechanism and understanding how it works is of crucial importance to the design of pro-equality electoral systems, and democratic institutions at large. ∗I appreciate the help of Adam Przeworski in guiding and inspiring this research. For comments, I am grateful to Joan Maria Esteban, Shanker Satyantath and David Stasavage, as well as to my Ph.D. advisors Josu Arteche and Annick Laurelle. This paper was born during my visiting appointment at the Wilf Family D...
The Nexus of Political Inequality and Economic Inequality in Established Democracies
It is widely accepted that citizens are not politically equal in economically unequal societies, and that political inequality in turn has a detrimental effect on the distributive process. However, there has been a lack of empirical evidence about this relationship largely because measures of political inequality are not well developed. To explore the puzzle, this article first constructs the Political Inequality Index (PII) that is composed of two dimensions: political participation and representation, which reflect the equality of political voice. The index builds on a middle-range approach that excludes both equality of voting and equality of political outcomes and covers 69 democracies over the period between 1990 and 2012. This inquiry then investigates the reciprocal relationship between political inequality and two distributive stages (market inequality and redistribution), using both the OLS and 2SLS estimation. Overall, the results do not support that there is significant endogenous effects between political inequality and economic inequality, while controlling for a host of economic, social, and political factors, although there exists some evidence of correlation.
Democracy and Income Inequality: Revisiting the Long- and Short-Term Relationship
SSRN Electronic Journal, 2010
This paper studies the relationship between democracy and income inequality in long-and short/medium-run. Using appropriate econometric techniques on both, averaged and panel data for the period 1962-2006, we find no evidence that democracy is associated with tighter income distribution. Our results are robust to different specification techniques, to exclusion of developed as well as the transition countries. We speculate that different (and opposing) transmission mechanisms, as well as the nature and the definition of the democracy variable (both Polity IV and Freedom House) influence our results. Improvement of conceptualization and measurement of democracy could shed further light onto the democracy-inequality nexus.
Democracy and Income Inequality: An Empirical Analysis
SSRN Electronic Journal, 2000
While standard political economy theories suggest a moderating effect of democratization on income inequality, empirical literature has failed to uncover any such robust relationship. Here we take yet another look at this issue arguing first, that prevailing ideology may be an important determinant of inequality and, second, that the democratization effect "works through" ideology. In societies where equality is highly valued there is less of a distributional conflict across income groups, hence democratization may have only a negligible effect on inequality. On the other hand, in societies where equality is not valued as much, democratization reduces inequality through redistribution as the poor outvote the rich. Our cross-country empirical analysis, covering the period 1960-98 and 126 countries, confirms the hypothesis: ideology -as proxied by a country's dominant religion -seems to be related to inequality. But in addition, in Judeo-Christian societies increased democratization appears to lead to lower inequality, while in Muslim and Confucian societies democratization has only an insignificant effect on inequality. We hypothesize that in the latter group of countries, desired level of inequality is reached through informal transfers, while in Judeo-Christian societies where family ties are weaker, desired outcome is achieved by political action.
Democracy and Income Inequality: Searching for a Reciprocal Causal Relation
Ph.D Thesis, 2019
The study of the relation between democracy and income inequality is puzzling scholars at least since the 1970s, however, there is still no agreement about how the relation between the two variables would shape nor how the causal mechanisms would work, and some scholars even denied the presence of any causal relation. The aim of the present work is to shed light on such a disagreement by addressing the relation between the two variables from a political science rather than a purely economic viewpoint, developing a more complete theoretical framework abandoning some of the economic premises mostly employed insofar. In particular, the work aimed to answer the following main research questions: does, and through which channels, the state’s regime influences its levels of inequality? Does, and through which channels, inequality influence a state’s regime? Is there a reciprocal rather than unidirectional causal relation between the two variables? Through the employment of a mixed inductive/deductive approach, the present work firstly analyses the theoretical and empirical literature on the subject. Secondly, based on the literature and on the most established theories, it presents some speculations about the functioning and the mechanisms underlying the relation between the two variables. Thirdly, to refine the theory, and to assess the presence of variables and sub-mechanisms interfering with the principal relations, it carries out the study of three peculiar cases that deviates from the established theories and from the speculations. Fourthly, using the insights provided by the case studies, it elaborates a refined theoretical framework capable to explain the relation between the two variables. Lastly, from the theoretical framework, it elaborates several hypotheses and tested them employing different econometric approaches. With respect to the two main variables, the quantitative analysis employed data on Gini from the Standardized World Income Inequality Dataset, and data on the quality of democracy respectively from the Unified Democracy Scores Dataset, the Polity IV Dataset and the Global States of Democracy Dataset. The estimates performed revealed some interesting results. First the estimates confirm that the quality of regime significantly reduce inequality, but only after a certain level of regime quality following the pattern of a political Kuznets curve, and that at the same time inequality negatively and significantly influences the quality of government. Second, they also confirmed the presence of a reciprocal causal relation between the two variables. In addition, the estimate confirmed that other variables and mechanisms concur in shaping the relation between the two main variables. In particular, education and the presence of a leftist government have a negative effect on inequality, corruption and the adherence to the economic neo-liberalism do increase countries’ levels of inequality, protests increase the quality of the regime, and that repression, on the contrary, does not have any significant effect on the quality of the regime. Third, the estimates also confirmed that citizens’ attitude toward inequality and redistribution and citizens’ perceptions on social mobility do influence countries’ levels of inequality. Lastly, the analysis of the effects of the different attributes of democracy on inequality and vice versa, through the employment of the Global state of Democracy indices, highlights that only some attributes of democratic quality significantly influence inequality while only some attributes are significantly influenced by inequality.
A Comparative Analysis of Inequality and Redistribution in Democracies
What is the relationship between income inequality and redistributive policies? This question carries with it important implications for both scholars of comparative politics and for core political dynamics in contemporary world politics. We contend that the current literature fails to provide satisfactory answers. It generally does not acknowledge heterogeneity in the relationship between inequality and redistributive policies across space and time, nor does it use cross-nationally comparable data on government redistribution and income. In this note, we compare the relationship between inequality and redistribution over time, as well as among clusters of developed and less developed countries. We use a number of statistical models to address the complexity of the relationship. We find a positive, short-term association between inequality and redistribution, controlling for endogeneity between redistribution and market income inequality. We also find that, over the long term, inequality increases redistribution in developed democracies, but appears to decrease it in a number of developing nations.
Political institutions and income (re-)distribution: evidence from developed economies
Public Choice, 2014
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.
2000
The effect of the distribution of political rights on income inequality has been studied both theoretically and empirically. This paper reviews the existing literature and, in particular, the available empirical evidence. Our reading of the literature suggests that formal exclusion from the political process through restrictions on the voting franchise appears to have caused a high degree of economic inequality, and democratization in the form of franchise expansion has typically led to an expansion in redistribution, at least in the small sample of episodes studied. In a less pronounced way, albeit more emphatically compared to the ambiguous results of the earlier research, the recent evidence indicates an inverse relationship between other measures of democracy, based on civil liberties and political rights, and inequality. The transition experience of the East European countries, however, seems to some extent to go against these conclusions. This, in turn, opens possible new vistas for research, namely the need to incorporate the length of democratic experience and the role played by ideology and social values.
Income and democracy: Revisiting the evidence
Economics Letters, 2012
It is well-known in the literature that income per capita is strongly correlated with the level of democracy across countries. In an infl uential paper, Acemoglu et al. (2008) fi nd that this linear correlation disappears once they control for country-specifi c effects focusing on within-country variation. In this paper we fi nd evidence of a non-linear effect from income to democracy even after controlling for country-specifi c effects. While a positive effect emerges for poor countries, this effect vanishes for rich countries.
Institute of Governmental Studies, 2005
We develop a general model of redistribution and use it to account for the remarkable variance in government redistribution across democracies. We show that the electoral system plays a key role because it shapes the nature of political parties and the composition of governing coalitions, whether these are conceived as electoral alliances between classes or alliances between class parties. Our argument implies a) that center-left governments dominate under PR systems, while center-right governments dominate under majoritarian systems, and b) that PR systems redistribute more than majoritarian systems. We test our argument on panel data for redistribution, government partisanship, and electoral system in advanced democracies.