Electoral Uncertainty, Income Inequality and the Middle Class

Anirban Mitra and Shabana Mitra ()

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate how increased electoral competition — by influencing the equilibrium policies of competing parties — affects the income distribution in society. Our model is embedded in a standard probabilistic voting setup where parties compete at two stages: (i) they allocate resources across various districts and (ii) then, for each district, they divide the resources among the different constituent groups. We show that an increase in electoral competition in a district results in a tendency towards equalization of incomes therein. We check for these relationships using data from the Indian national elections which are combined with household-level consumption expenditure data rounds from NSSO (1987-88 and 2004-05) to yield a panel of Indian districts. We find that districts which have experienced tight elections exhibit lower inequality and polarization which indicates a larger "middle class".

Keywords: Income distribution; polarization; political economy; targeting. (search for similar items in EconPapers)
JEL-codes: D72 D78 O20 (search for similar items in EconPapers)
Date: 2015-04
New Economics Papers: this item is included in nep-cdm and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Electoral Uncertainty, Income Inequality and The Middle Class (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:66990

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