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Political Institutions and Income (Re-)Distribution: Evidence from Developed Economies

25 Pages Posted: 4 Sep 2013  

Lars P. Feld

Walter Eucken Institute

Jan Schnellenbach

BTU Cottbus-Senftenberg, Institute for Economics, Chair for Microeconomics; Walter Eucken Institute

Date Written: August 30, 2013

Abstract

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.

Keywords: redistribution, formal institutions, fiscal decentralization, presidential and parliamentary regimes, electoral systems

JEL Classification: D310, H220, H110, H500, I380, P500

Suggested Citation

Feld, Lars P. and Schnellenbach, Jan, Political Institutions and Income (Re-)Distribution: Evidence from Developed Economies (August 30, 2013). CESifo Working Paper Series No. 4382. Available at SSRN: https://ssrn.com/abstract=2319882

Lars P. Feld (Contact Author)

Walter Eucken Institute ( email )

Goethestrasse 10
Freiburg im Breisgau, Baden-W├╝rttemberg D-79100
Germany

Jan Schnellenbach

BTU Cottbus-Senftenberg, Institute for Economics, Chair for Microeconomics ( email )

Erich-Weinert-Str. 1
Cottbus, 03046
Germany

HOME PAGE: http://https://www.b-tu.de/fg-vwl-mikro/team/prof-dr-jan-schnellenbach

Walter Eucken Institute ( email )

Goethestr. 10
Freiburg, 79100
Germany

HOME PAGE: http://www.eucken.de

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