Political Economy Of Redistribution Research Articles

Political economy of redistribution between traditional and modern families

AbstractWe analyse a model in which families may either be ‘traditional’ single-earner that care for the child at home or be ‘ modern’ double-earner households that use market child care. Family policies may favour one or the other group, like market care subsidies vs. cash-for-care. Policies are determined by probabilistic voting, where distributional impacts matter, both within and across groups. A higher share of modern households—which can be induced by changes in social norms or by changes in gender wage inequality—may have non-monotone effects, with lower net subsidies to traditional households when their share is very low or very high, and higher subsidies in some intermediate stage. This may explain the implementation of cash-for-care policies and their subsequent tightening in late stages of development, when most voters come from modern households, observed in Norway and Sweden.

The nexus between perceptions of inequality and preferences for redistribution

This paper shows that perceptions of inequality are a key factor in the formation of preferences for redistribution and thereby in the determination of the equilibrium redistribution level. We build on the novel stylized facts provided by the survey experimental literature on perceptions of income inequality, highlighting that agents incorrectly estimate the shape of the income distribution because of limited information. Agents with income above the mean believe they are poorer than they actually are, and agents with income below the mean believe themselves to be richer. We revisit the standard framework on the political economy of redistribution and extend it in two ways. First, we introduce a more general two-sided inequality aversion. Second, we incorporate perceptions of income inequality, modeled by assuming that agents form expectations on the income level of the richest and the poorest in society. We show analytically that the equilibrium redistribution level is crucially determined by the interplay between the information treatment correcting the bias in perceptions of inequality and fairness considerations specified by the degree of inequality aversion. By doing this, we add (biased) perceptions of inequality to the list of potential factors explaining why, notwithstanding high inequality, an increase in the desire for redistribution has not been observed in many countries.

Redistribution under General Decision Rules

We study the political economy of redistribution over a broad class of decision rules. Since the core is generically non-unique, we suggest a simple and elegant procedure to select a robust equilibrium. Our selected policy depends on the full income profile, and in particular, on the preferences of two decisive voters. The effect of increasing inequality on redistribution depends on the decision rule and the shape of the income distribution; redistribution will increase if both decisive voters are 'relatively poor', and decrease if at least one is sufficiently 'rich'. Additionally, redistribution decreases as the polity adopts increasingly stringent super-majority rules.

Political Economy of Redistribution between Traditional and Modern Families

We analyse a model in which families may either be “traditional” single-earner with caring for the child at home or “modern” double-earner households using market child care. Family policies may favour either the one or the other group, like market care subsidies vs. cash for care. Policies are determined by probabilistic voting, where allocative and distributional impacts matter, both within and across groups. Due to its impact on intragroup distribution, both types of households are likely to receive subsidies. In early stages of development where most households are traditional, implemented policies favour them, though to a small extent. Net subsidies to traditional households are highest in some intermediate stage, which may explain the implementation of cash for care policies. Such policies will be tightened again in late stages of development, where the vast majority of voters come from modern households. Finally, in an environment in which many traditional households are not entitled to vote (immigrants who have not yet obtained citizenship), redistribution toward them may be abolished and in extreme cases even replaced by net transfers to modern households.

Atlas Nods: The Libertarian Case for a Basic Income

Proposals for a universal basic income are generating interest across the globe, with pilot experiments underway or in the works in California, Canada, Finland, Italy, Kenya, and Uganda. Surprisingly, many of the most outspoken supporters of a universal basic income have been self-described libertarians — even though libertarians are generally considered to be antagonistic toward redistribution and a universal basic income is, at its core, a program of income redistribution. What explains such strong libertarian support for a policy that seems so contrary to libertarian ideals? This Article seeks to answer that question. We first show that a basic safety net is not only consistent with, but likely required by, several strands of libertarian thought. We then explain why libertarians committed to limited redistribution and limited government might support a system of unconditional cash transfers paid periodically. Delivering benefits in cash, rather than in-kind, furthers autonomy by recognizing that all citizens — even poor ones — are the best judges of their needs. Decoupling such transfers from a work requirement acknowledges that the state lacks the ability to distinguish between work-capable and work-incapable individuals. Providing payments periodically, rather than through a once-in-a-lifetime lump sum grant, ensures that all individuals can receive a minimum level of support over lifespans of variable lengths, while also allowing individuals to adjust payment flows through financial market transactions. Although our main objective is to assess the fit between libertarian theory and a universal basic income, we also address various design choices inherent in any basic income scheme: who should receive it?; how large should it be?; which programs might it replace?; and should it phase out as market income rises? Lastly, we consider the relationship between a basic income and the political economy of redistribution. We find that the case for a basic income as a libertarian “second-best” is surprisingly shaky: libertarians who oppose all redistribution but grudgingly accept a basic income as the least-worst form of redistribution should reconsider both aspects of their position. We conclude by drawing out lessons from our analysis for non-libertarians, regardless of whether they are supportive or skeptical of basic income arguments.

Political Economy of Redistribution

It is often argued that additional constraints on redistribution such as granting veto power to more players in society better protects property from expropriation. We use a model of multilateral bargaining to demonstrate that this intuition may be flawed. Increasing the number of veto players or raising the supermajority requirement for redistribution may reduce protection on the equilibrium path. The reason is the existence of two distinct mechanisms of property protection. One is formal constraints that allow individuals or groups to block any redistribution that is not in their favor. The other occurs in equilibrium where players without such powers protect each other from redistribution. Players without formal veto power anticipate that the expropriation of other similar players will ultimately hurt them and thus combine their influence to prevent redistributions. In a stable allocation, the society exhibits a “class” structure with class members having equal wealth and strategically protecting each other from redistribution.

Political Economy of Redistribution in the United States in the Aftermath of World War II—Evidence and Theory

We present legislative, historical and statistical evidence of a substantial upward ratchet in transfers and taxes in the US due to World War II. This finding is explained within a political-economy framework with defense spending responding to a war threat and a median voter in the population who interacts with a (richer) agenda setter in Congress in setting redistribution. While the setter managed to cap redistribution before the War, the War itself raised the status quo tax burden and improved tax collection technology, strengthening the bargaining power of the median voter as defense spending receded. This permanently raised the level of redistribution. (JEL D72, H11, H23, H56, N32, N42)

How Do Governments Fare About Redistribution? New Evidence on the Political Economy of Redistribution

We examine whether and to what extent political institutions explain different performances in income redistribution across countries. In particular, we first review available sources of data and measures of income redistribution, discussing the pros and cons of each one. Second, we outline a conceptual framework that distinguishes traditional demand side explanations of redistribution from resources and instruments, as well as supply side factors. We then provide 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.

Trade and the political economy of redistribution

This paper shows how international trade affects the support for policies which redistribute income between workers across sectors, and how the existence of such policies changes the support for trade liberalization. Workers, who are imperfectly mobile across sectors, vote on whether to subsidize ailing sectors, thereby redistributing income but also distorting the labor allocation. We present three main findings. First, redistributive policies are more “likely” to arise in a small open than in a closed economy for a broad range of parameters. Second, if a redistributive policy is adopted in both situations, income differences across sectors tend to be lower in the open economy. Third, the possibility to redistribute income across sectors raises the political support for trade liberalization in the first place.

The Political Economy of Redistribution: The Interaction between Power Resource Theory and the Electoral System

The Political Economy of Redistribution: The Interaction between Power Resource Theory and the Electoral System

Trade and the Political Economy of Redistribution

Trade and the Political Economy of Redistribution

Declining inequality in Latin America: a decade of progress?

Latin America is often singled out for its high and persistent income inequality. Toward the end of the 1990s, however, income concentration began to fall across the region. Of the seventeen countries for which comparable data are available, twelve have experienced a decline, particularly since 2000. This book is among the first efforts to understand what happened in these countries and why. Led by editors Felipe Li?½pez-Calva and Nora Lustig, a panel of distinguished economists undertakes in-depth analyses of Argentina, Brazil, Mexico, and Peru. In addition, they provide essential background in the form of overviews of the relationship between markets and inequality, the political economy of redistribution, and the evolution of income inequality in the advanced industrialized economies. Two factors account for much of the decline in inequality: a decrease in the wage gap between skilled and low-skilled labor, and an increase in government transfers targeted to the poor. Thanks to the timeliness and sophistication of these essays, Declining Inequality in Latin America is likely to become a standard reference in its field.

Cores, Peripheries, and Contemporary Political Economy

This note underscores the need for more precise causal theories linking the international division of labor, national economies, and public policies. To that end, the author recommends two literatures upon which a revised dependency theory might build, namely, those on economic geography and the political economy of redistribution.

Inequality, Redistribution, and Population

We document a negative relationship between population size and inequality in the cross-country data. We propose an explanation built on the existence of a size effect in the political economy of redistribution, particularly in the presence of different channels of popular request for redistribution, e.g. “institutional” channels and “revolutions”. Based on the assumption that the threat of revolution is directly related to the number of people that may attempt to revolt, the theory predicts that the stylized fact initially uncovered by the paper can be refi ned as follows: there is an egative relationship between population size, and its geographical concentration, and post-tax inequality in non-democracies. We subject these predictions to extensive empirical scrutiny in a cross-country context, and the data robustly confirm these patterns of inequality, population, and the interaction with democracy.

The political economy of redistribution under democracy

We ask what redistributions of income and assets are feasible in a democracy, given the initial assets and their distribution. The question is motivated by the possibility that if redistribution is insufficient for the poor or excessive for the rich, they may turn against democracy. In turn, if no redistribution simultaneously satisfies the poor and the wealthy, democracy cannot be sustained. Hence, the corollary question concerns the conditions under which democracy is sustainable. We find that democracies survive in wealthy societies. Conditional on the initial income distribution and the capacity of the poor and the wealthy to overthrow democracy, each country has a threshold of capital stock above which democracy survives. This threshold is lower when the distribution of initial endowments is more equal and when the revolutionary prowess of these groups is lower. Yet in poor unequal countries there exist no redistribution scheme which would be accepted both by the poor and the wealthy. Hence, democracy cannot survive. As endowments increase, redistribution schemes that satisfy both the poor and the wealthy emerge. Moreover, as capital stock grows the wealthy tolerate more and the poor less redistribution, so that the set of feasible redistributions becomes larger. Since the median voter prefers one such scheme to the dictatorship of either group, democracy survives.

Macrolevel Theory and Local-Level Inequality: Industrial Structure, Institutional Arrangements, and the Political Economy of Redistribution, 1970 and 1990

This study assesses the explanatory power of macrolevel political economy theory for redistribution across local areas. We focus on contentions about the role of industrial structure and institutional arrangements in income growth and inequality in two periods, 1970 and 1990. Specific hypotheses are derived from the Social Structures of Accumulation approach. These include (1) that redistribution processes have shifted, with manufacturing employment and institutional arrangements between capital-labor and state-citizens less able to generate local growth and reduce income inequality than in the past, and (2) that effects of manufacturing employment on inequality are partly contingent on local institutional context. These hypotheses are tested for U.S. counties using regression models that conceptualize geographic processes through spatial diffusion effects and nesting of counties within states. Results support most baseline, 1970 relationships suggested by theory. Other findings run counter to political economy claims. They do not support assumptions that progressive institutional arrangements and leading manufacturing industries worked in tandem to reduce inequality. Relationships between inequality and manufacturing employment remain similar in 1970 and 1990, but there is some evidence that the role of institutional arrangements in redistribution may be shifting. On balance, however, local patterns of inequality and their social determinants have changed little despite two decades of Fordist restructuring. The results provide local-level evidence challenging widely held assumptions about a profound break in redistribution relationships relative to the past. They indicate the need to investigate inertia as a social process.

Neill, Jon (sous la direction de), Poverty and Inequality: The Political Economy of Redistribution

Neill, Jon (sous la direction de), Poverty and Inequality: The Political Economy of Redistribution. Un article de la revue Relations industrielles / Industrial Relations (Relations industrielles et nouveaux systèmes productifs) diffusée par la plateforme Érudit.

Poverty and inequality: the political economy of redistribution

Poverty and inequality: the political economy of redistribution

Class and Gender in Australian Income Security

Women's interests are central to current reconstruction of the Australian welfare state, yet feminist theorising has less and less to say about state, class and gender. In part this is because its most promising paradigm, feminist extension of Marxist theory, has not responded to criticism for reducing gender to class and conflating function, effect and intention. This article is an attempt to rework the theoretical nexus of class and gender in the context of a specific institutional structure. It sees income secu rity provisions as historically constructed in the day-to-day politics of the welfare state, through which its structures are simultaneously 'classed' and 'gendered'. Australian income se curity is defined through intersecting frameworks of categorical eligibility and selective, needs-based allocation. Its tax/transfer framework situates the income security system within a larger political economy of redistribution. Class and gender structures lie in the conditions under which income security measures pro vide subsistence outside the labour market and the family unit within which the calculus of trade-off is determined. Allocative frameworks have class and gender effects to the extent that the income security system enforces family solidarities, gender ideologies and labour market incentives. Class and gender inter ests are embodied in terms of trade among income, gender and life-cycle groups in redistribution within and against histori cally constructed political and functional limits.

The political economy of redistribution and self-reliance

The political economy of redistribution and self-reliance