فرضیه رای دهنده میانه ، نابرابری درآمد، و توزیع مجدد درآمد : آزمون تجربی با داده های مورد نیاز

The median-voter hypothesis has been central to an extensive literature on consequences of income redistribution. For example, it has been proposed that greater inequality is associated with lower growth, because of the greater redistribution that is sought by the median voter when income distribution is less equal. There have however been no proper tests of the median-voter hypothesis concerning redistribution, because of previous absence of data on factor-income distribution (that is, incomes before taxes and transfers) across households, and thus on the gains by poorer households from redistribution. The study reported in this paper is based on the required data, with 79 observations drawn from household budget surveys from 24 democracies. The results strongly support the conclusion that countries with greater inequality of factor income redistribute more to the poor. This is so even when we control for the share of the elderly in the population and for pension transfers. The evidence that the median-voter hypothesis adequately describes the collective-choice mechanism is however considerably weaker. Although middle-income groups gain more/or lose less through redistribution in countries where initial (factor) income distribution is more unequal, this regularity is all but lost when, by excluding pensions, we look only at explicit redistributive social transfers from which middle classes contemporaneously gain little. This leaves us searching for an alternative explanation: do middle-classes gain from transfers in the long run even if not contemporaneously?; or is the median-voter hypothesis, based on direct democracy, a proper representation of the mechanisms of collective decision making in representative democracy?

A key relationship in the literature on inequality and growth (see Perotti, 1992, Perotti, 1993, Persson and Tabellini, 1994, Bertola, 1993, Alesina and Rodrik, 1994 and Alesina and Perotti, 1994) concerns the link between market-generated income inequality and the extent of redistribution. In Perotti's (1996, pp. 151) extensive empirical review of the theories linking growth, income distribution, and democracy, this relationship appears under the title of an “endogenous fiscal policy approach”. This approach includes two components or structural equations. The first component is a political mechanism through which greater income inequality leads to greater redistribution, and thus, more distortionary taxation. The second component is an economic mechanism through which the distortionary taxation reduces growth. The conclusion is that greater income inequality slows growth. In this paper, I will be concerned only with the first of these components involving the political mechanism. When individuals are ordered according to their factor (or market) incomes,1 the median voter (the individual with the median level of income) will be, in more unequal societies, relatively poorer. His or her income will be lower in relation to mean income. If net transfers (government cash transfers minus direct taxes) are progressive, the more unequal is the income distribution, the more the median voter has to gain through joint action of taxes and transfers, and the more likely he or she is to vote for higher taxes and transfers.2 With the median voter as decisive, more unequal societies will therefore choose greater redistribution. This approach assumes that (1) voters' decisions on transfers and taxes are determined solely by their position in the income distribution, (2) preferences of voters are single-peaked, and (3) all (or almost all) individuals vote. The last assumption implies that the relationship between market-generated inequality and redistribution should be more pronounced in democracies than in authoritarian regimes where governments can decide to ignore the preferences of the poor (see Perotti, 1996, Alesina and Perotti, 1994 and Alesina and Rodrik, 1994). Previous research has not included a structural equation for the underlying median-voter political redistribution mechanism. What almost all researchers have done in their empirical analysis is to estimate the reduced form equation in which inequality in the distribution of disposable income is used as a regressor to explain the growth rate over a period of time (see Persson and Tabellini, 1992, Persson and Tabellini, 1994, Alesina and Rodrik, 1994, Alesina and Perotti, 1994 and Easterly and Rebelo, 1993). They do this because the data required to estimate the structural equation are difficult to obtain; factor-income distribution was, until recently, unavailable, and, without data on factor-income distribution, one cannot calculate the extent of redistribution. Thus, neither the extent of redistribution nor the mechanism by which it occurs — the median-voter hypothesis — has been tested directly. There are, however, qualifications to this observation. Perotti, 1993 and Perotti, 1996, Easterly and Rebelo (1993, p. 436) and Bassett et al. (1999) estimate a structural equation of the type equation(1) View the MathML source where T denotes taxes or social transfers as shares of GDP, or as in Perotti (1996), the marginal tax rate. Id is an index of inequality of disposable income, and Z denotes other relevant variables (e.g. a democracy dummy variable, or a percent of population over 65 years of age, since a larger share should imply greater transfers for pensions). Perotti's 1996 paper presents the most detailed test. He finds lack of a significant relationship between the equality variable (“middle-class share” defined as the combined income shares of the third and fourth quintiles of the population ranked according to disposable income) and the marginal tax rate in various formulations: this is so whether the share of the middle class alone is included in the equation, or is interacted with a democracy dummy. Even in a sample of democracies alone, the coefficient has the right sign but is not significant (Perotti, 1996, p. 170; Table 8). When, instead of the marginal tax rate, Perotti uses, on the left-hand side, social security and welfare, or health and housing, or education expenditures (each as a share of GDP), greater inequality in disposable income is associated with greater social transfers only in the case of democracies, and for social security and welfare alone. Perotti concludes (p. 172) that …there is…very little evidence of a negative association between equality and fiscal variables in democracies. It is true that the political mechanism [the variable that interacts the share of the middle class and democracy] has the expected negative sign in four cases out of six, but social security and welfare is the only type of expenditure for which it is significant. Bassett et al. (1999) re-estimated these relationships using three redistribution proxies: (i) public transfers, (ii) social security transfers, and (iii) social security and education as shares of GDP, and the share of the middle quintiles in disposable income as the inequality proxy. They too, find that the coefficient on the median voter either has a “wrong” sign (a higher share of the middle class increases transfers) or is not statistically significant. Moreover, their results are highly unstable. Thus, in the only two direct empirical tests of the median-voter hypothesis, the hypothesis is found wanting. The above approach is, however, doubly unfortunate, since both the left-hand side and the right-hand side variables are misspecified. On the right-hand side, there is disposable income inequality, which is inequality after both taxes and transfers. However, people's voting decisions about redistribution are based on their incomes before redistribution.3 It is methodologically incorrect to explain people's decisions about their optimal level of taxes and transfers as depending on the distribution that emerges as a consequence of these decisions. The approach thus has a time-sequencing problem. In reality, people first receive their factor incomes, and then decide how much they are willing to redistribute through taxation and social transfers. The methodologically correct approach is to specify the decision regarding the extent of redistribution as depending on the distribution of market or factor (pre-transfer and pre-tax) incomes. It is also incorrect to use as the dependent variable the share of government transfers in GDP or the marginal tax rate. It is not the share of GDP that matters here, but a measure of the extent of redistribution through transfers and taxes. A society with high taxes and transfers may have contributors and beneficiaries who are the same people. Looking at the share of transfers or taxes in GDP would then give the mistaken impression that the society has chosen substantial redistribution when the reality is exactly the opposite and redistribution is minimal. Corporatist societies of continental Europe (Austria, Germany) are often considered to follow predominantly such policies (see Esping-Andersen, 1990). Le Grand (1982) has similarly argued that most transfers are given to the middle class. The essential point is that the size of transfers is in itself an imperfect indicator of the extent of redistribution. A correct approach investigates how much the bottom groups in the population according to factor income increase their share in disposable income as a consequence of redistribution. That is, a correct approach estimates the income gain of the poor. The relationship that we should test is equation(2) View the MathML source where R is an index of redistribution and Im is an index of inequality of factor incomes. Eq. (2) specifies the extent of redistribution as a function of the initial inequality with which factor incomes are distributed. This formulation is flexible. Voters may choose small but very redistributive policies or a series of extensive, but less redistributive programs. Each type of policy may reduce equally the initial inequality. There are two hypotheses present here. The first hypothesis is that countries with more unequal initial incomes redistribute more. The second hypothesis proposes one explanation for why this may be so — the median-voter hypothesis. These are two distinct hypotheses. The first is purely empirical. The second is about a specific political mechanism. Observe that both sides of the correct specification (2) differ from (1). This is because both sides of (1) are proxies for the “true” variables: the share of transfers in GDP or the marginal tax rate is a proxy for redistribution; and inequality in the distribution of disposable income is a proxy for the inequality in distribution of factor income. As I have noted, previous researchers have used Eq. (1) rather than Eq. (2) because the information on factor-income inequality indispensable for both sides of Eq. (2) has, for most countries, been unavailable. The income distribution statistics that have been available have, almost without exception, concerned disposable or gross (market plus transfers) income. It is only recently that the Luxembourg Income Survey (LIS) database has provided factor-income distributions for a number of countries. The LIS data enable us to observe changes in income distribution as one moves from pure market-determined incomes to incomes that include government cash transfers (gross income), and finally, to disposable income (gross income minus direct personal taxes). Moreover, since almost all countries in the LIS database are democracies, the two hypotheses can be tested precisely for the countries where they are supposed to hold the most. The paper is organized as follows. Section 2 describes the database. Section 3 considers the relationship between factor-income inequality and redistribution. Section 4 tests the median voter hypothesis. Section 5 concludes the paper.

The purpose of this study has been twofold: (1) to test the hypothesis of an inverse relationship between inequality in distribution of factor income and redistribution, and (2) to test one possible explanation for redistribution, the political collective-choice mechanism through the median-voter hypothesis. The approach taken in the paper is novel, in that, for the first time, both the median-voter hypothesis and the dependent and the independent variables in the redistribution equations are correctly specified. The dependent variable is the extent of redistribution — the income share gain of the lower half of income distribution according to factor income (“the poor”), or of the bottom quintile (“the very poor”), or the middle class (fifth and sixth decile). The independent variable is the inequality of factor incomes or the position of the middle class in factor-income distribution. Neither of these two variables was used in previous research, because they have not been readily available. The data used here are for a sample of 24 countries, with a total of 79 observations. The results show strong support for the redistribution hypothesis. More unequal factor-income countries redistribute more toward the poor and very poor. A country A with exactly the mean characteristics of the sample would have a factor Gini coefficient of 46.3, and the bottom half of its population (“the poor”) would receive 19.4% of the total factor income. When we move to disposable income distribution, that is, include all government cash transfers and personal taxes, the same average country would have a Gini of 32.2, and the samepeople would have increased their share to 32.1% of the total disposable income. The poor will therefore have gained a 12.7 percentage point share. Consider another country B, more unequal in terms of its factor-income distribution. Let the poor's factor-income share be 1 point less than their share in country A. Now, the redistribution in a more unequal country would be greater and the sharegain for the poor in country B would reach 13.7 percentage points, exactly 1 point more than in country A. The poor in both countries would therefore end up with the same share of disposable income. For the very poor (the bottom quintile), redistribution is even stronger making their position in terms of disposable income share negatively related to their starting position (factor-income share). The effects of redistribution become more muted when pensions are taken out of transfers and treated as factor income. The negative sign between the poor's share in factor income and share gain persists, and the coefficient remains statistically highly significant throughout, but is much smaller. Now, redistribution compensates for only 70% of the poor's initial shortfall in a more unequal country (i.e. the poor in country B will no longer be able to “catch up”, in terms of disposable income, with the poor in country A), and for a little over 90% of the very poor's shortfall. While the evidence supports the link between the extent of pro-poor redistribution and factor-income inequality, the evidence that redistribution takes place through the median voter channel is much weaker. The data — based on cash transfers only — do not allow us to conclude that the middle class is a net beneficiary of redistribution. Comparing cash transfers and taxes only, the middle-income groups appear invariably to be losers. However, it is likely that, if we included transfers in kind, the middle classes may turn out to be net beneficiaries. When we test a weaker formulation of the median voter hypothesis — namely that lower factor-income shares of the middle class are associated with a greater share gain — we find that the relation holds when pensions are included among cash transfers. When pensions are excluded, there is much less evidence that the middle classes starting from a less favorable factor income position redistribute more in their own favor. The median voter hypothesis thus fails when we focus on the truly redistributive transfers. The middle classes contemporaneously gain little from these transfers. This leaves us looking for explanations. First, since those poorer than the middle classes contemporaneously gain, perhaps the decisive voter is at a level income lower than the median? This seems implausible. Recent research has, if anything, moved in the direction of the conclusion that the decisive voter at a level higher than the median (see Bassett et al., 1999). Second, the absence of contemporaneous middle-class gain may mask a long-run middle-class gain from redistributive programs. Those currently in the middle class may not profit from current social transfers. They may, however, be willing to finance the transfers as insurance for themselves (they for example, receive transfers if they become unemployed). Third, and most problematically for previous studies, the median-voter hypothesis may not be the appropriate collective-decision making mechanism to explain redistribution decisions. The median-voter hypothesis is based on direct voting. Other than in Switzerland (and in various degrees amongst cantons; see Feld and Kirchgässner 2000), collective decisions are made with institutions of representative democracy rather than direct democracy. Since direct voting does not take place on every issue, the median-voter hypothesis applied to voters does not describe the collective decision-making rule. There is therefore a question whether, and to which extent, policy outcomes for an issue under representative democracy reflect the preferences of the median voter. The results that are reported in this paper suggest broad-ranging outcomes where the institutions of representative democracy do not result in the redistribution that would be sought by the median voter.