Comparing governments’ efficiency at supplying income redistribution

Abstract

We examine whether and to what extent political institutions explain different performances in income redistribution across countries. After reviewing the available data sources, the measures of income redistribution and the traditional demand side explanations of redistribution, we focus our analysis on supply side factors, like political and economic institutions, rent seeking processes and the resources and instruments available for redistribution. We provide robust empirical evidence on the association between these different factors and the observed degree of redistribution. Our analysis supports the view that—for a given demand of redistribution—political and economic institutions contribute to explain differences across countries in the observed degree of redistribution.