Language:
English
Pages:
Online-Ressource (1 online resource (56 p.))
Edition:
Online-Ausg. World Bank E-Library Archive
Parallel Title:
Milanovic, Branko Do More Unequal Countries Redistribute More?
Keywords:
Consumption
;
Disposable Income
;
Economic Mechanism
;
Economic Theory and Research
;
Emerging Markets
;
Endogenous Growth
;
Factor Income
;
Finance and Financial Sector Development
;
Financial Literacy
;
Fiscal and Monetary Policy
;
Growth Rate
;
Growth Theories
;
Income
;
Income
;
Income Distribution
;
Income Groups
;
Income Inequality
;
Inequality
;
Inequality
;
Investment and Investment Climate
;
Labor Policies
;
Macroeconomics and Economic Growth
;
Mean Income
;
Median Voter
;
Median Voter Hypothesis
;
Personal Income
;
Personal Income Taxes
;
Political Mechanism
;
Poverty Impact Evaluation
;
Poverty Reduction
;
Private Sector Development
;
Public Choice
;
Public Sector Development
;
Services and Transfers to Poor
;
Significant Relationship
;
Social Protections and Labor
;
Consumption
;
Disposable Income
;
Economic Mechanism
;
Economic Theory and Research
;
Emerging Markets
;
Endogenous Growth
;
Factor Income
;
Finance and Financial Sector Development
;
Financial Literacy
;
Fiscal and Monetary Policy
;
Growth Rate
;
Growth Theories
;
Income
;
Income
;
Income Distribution
;
Income Groups
;
Income Inequality
;
Inequality
;
Inequality
;
Investment and Investment Climate
;
Labor Policies
;
Macroeconomics and Economic Growth
;
Mean Income
;
Median Voter
;
Median Voter Hypothesis
;
Personal Income
;
Personal Income Taxes
;
Political Mechanism
;
Poverty Impact Evaluation
;
Poverty Reduction
;
Private Sector Development
;
Public Choice
;
Public Sector Development
;
Services and Transfers to Poor
;
Significant Relationship
;
Social Protections and Labor
Abstract:
December 1999 - The data strongly support the hypothesis that countries with more unequal distribution of factor income redistribute more in favor of the poor - even when the analysis controls for older people's share in total population (that is, for pension transfers). But the evidence on the median voter hypothesis is inconclusive even if middle-income groups gain more (or lose less) through redistribution in countries where initial (factor) income distribution is more unequal. The median voter hypothesis is important to endogenous growth theories because it provides the political mechanism through which voters in more unequal countries redistribute a greater proportion of income and thus (it is argued), by blunting incentives, reduce the country's growth rate. But the hypothesis was never properly tested because of lack of data on the distribution of (pre-tax and transfer) factor income across households, and hence on the exact amount of gain by the poorest quintile or poorest half. Milanovic tests the hypothesis using 79 observations drawn from household budget surveys from 24 democracies. The data strongly support the hypothesis that countries with more unequal distribution of factor income redistribute more in favor of the poor - even when the analysis controls for the older people's share in total population (that is, for pension transfers). The evidence on the median voter hypothesis is much weaker. Milanovic does find that middle-income groups gain more (or lose less) through redistribution in countries where initial (factor) income distribution is more unequal. This regularity evaporates, however, when pensions are dropped from social transfers and the focus is strictly on the more redistributive social transfers. This paper - a product of Poverty and Human Resources, Development Research Group - is part of a larger effort in the group to study the relationship between democracy and inequality. The study was funded in part by the Bank's Research Support Budget under the research project Democracy, Redistribution, and Inequality (RPO 683-01). Also published as “The median voter hypothesis, income inequality and income redistribution: An empirical test with the required data”, European Journal of Political Economy , vol. 16, No. 3, September 2000, pp. 367-410. The author may be contacted at bmilanovicworldbank.org
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