15:00 - 16:40
P4-S85
Room: -1.A.07
Chair/s:
Miriam Sorace
Discussant/s:
Miriam Sorace
(How) Do Governments Respond To Rising Inequality? The Distributional Effects of Tax-and-Transfer Changes in Western Europe (POLEI)
P4-S85-1
Presented by: Mads Andreas Elkjær
Mads Andreas Elkjær
University of Copenhagen
Researchers are raising alarm that democratic institutions may be subverted by the power of money. One part of the literature uses macro-level data to argue that governments do not compensate lower-income groups for rising inequality; another argues that this is because redistributive policies are heavily biased toward the preferences of the affluent. This paper presents an original approach to examine political representation and reassess these conclusions. Drawing on microsimulations, I analyze the distributional effects of changes to tax-and-transfer policies in 14 Western European countries since the mid-2000s. I find little evidence that tax-and-transfer changes primarily serve the interests of the affluent. To the contrary, the analysis shows that in most countries governments have implemented progressive policy changes, particularly when market inequality is high and left parties are in power. These results suggest that democratic institutions are more resilient to rising inequality than much recent work suggests.
Keywords: Inequality, redistribution, democracy, partisanship

Sponsors