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One Dollar, One Vote

Economic Journal, Forthcoming

39 Pages Posted: 11 May 2010 Last revised: 25 Sep 2010

Loukas Karabarbounis

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

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Date Written: September 21, 2010

Abstract

This paper revisits the relationship between inequality and redistribution in a panel of advanced OECD countries. Using panel data methods that hold constant a variety of determinants of redistributive spending, I find a non-monotonic relationship between pre-tax-and-transfer distribution of income and redistribution. Relative to mean income, a more affluent rich and middle class are associated with less redistribution and a richer poor class is associated with more redistribution. These results are consistent with a one dollar, one vote politico-economic equilibrium: When the income of a group of citizens increases, aggregate redistributive policies tilt towards this group's most preferred policies.

Keywords: Distribution, Inequality, Redistribution

JEL Classification: C23, D31, H50, P16

Suggested Citation

Karabarbounis, Loukas, One Dollar, One Vote (September 21, 2010). Economic Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1599135

Loukas Karabarbounis (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 South Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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