One Dollar, One Vote

Abstract

This article revisits the relationship between inequality and redistribution in a panel of advanced OECD countries. Using panel data methods that hold constant a variety of determinants of redistributive spending, I find a non‐monotonic relationship between pre‐tax‐and‐transfer distribution of income and redistribution. Relative to mean income, a more affluent rich and middle class are associated with less redistribution and a richer poor class is associated with more redistribution. These results are consistent with a one dollar, one vote politico‐economic equilibrium: when the income of a group of citizens increases, aggregate redistributive policies tilt towards this group’s most preferred policies.

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