Theory

Takeshi Kawanaka () and Yasushi Hazama ()
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Takeshi Kawanaka: Japan External Trade Organization
Yasushi Hazama: Japan External Trade Organization

Chapter Chapter 2 in Political Determinants of Income Inequality in Emerging Democracies, 2016, pp 21-41 from Springer

Abstract: Abstract The median voter theorem predicts that a democratic government will implement a redistributive policy if the country’s median income is below the mean income. Empirical observations provide a different picture than this theoretical prediction as we observe variations in redistributive policies enacted by different democracies. Two dominant theories on the welfare state in advanced democracies—the power resource theory and the “Varieties of Capitalism” model—try to explain these variations by means of conflicts or interactions between different classes. However, their explanatory power is limited because their underlying assumptions do not necessarily hold in emerging democracies. Individual preferences are determined not only by income status but also by non-economic group identities, such as ethnic group, that constitute the major social gap in emerging democracies. Due to imperfect information in political markets, where clientelism surpasses institutionalized party systems, voter preferences are not automatically channeled into public policy. Furthermore, in many cases, the state lacks sufficient capacity to implement policies. In other words, emerging democracies face the problems of multidimensional preferences, the failure of the political market, and weak state capacity. These political factors combine to determine the level of inequality reduction in emerging democracies. The inequality in emerging democracies can be better understood by examining the influence of these political factors found in the political process than by adhering to the class-based perspective.

Keywords: Democracy; Inequality; Class; Preferences; Political market; State capacity (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:spr:spbchp:978-981-10-0257-1_2

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DOI: 10.1007/978-981-10-0257-1_2

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