Determinants of governmental redistribution: Income distribution, development levels, and the role of perceptions

Klaus Gründler () and Sebastian Köllner

Journal of Comparative Economics, 2017, vol. 45, issue 4, 930-962

Abstract: We empirically investigate the relationship between income inequality and redistribution, accounting for the shape of the income distribution, different development levels, and subjective perceptions. Cross-national inequality datasets that have become available only recently allow for the assessment of the link for various sample compositions and several model specifications. Our results confirm the Meltzer-Richard hypothesis, but suggest that the relation between market inequality and redistribution is even stronger when using perceived inequality measures. The findings emphasize a decisive role of the middle class, though also approving a negative impact of top incomes. The Meltzer-Richard effect is less pronounced in developing economies with less sophisticated political rights, illustrating that it is the political channel through which higher inequality translates into more redistribution.

Keywords: Redistribution; Inequality; Perceived inequality; Dynamic panel data (search for similar items in EconPapers)
JEL-codes: C23 D31 D72 H11 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:45:y:2017:i:4:p:930-962

DOI: 10.1016/j.jce.2016.10.007

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