Income inequality and redistribution: Does democracy matter?

Abstract

Recent quantitative research on democratic countries has found a positive relationship between income inequality and redistribution. In other words, democracies respond to higher inequality by redistributing more. Can similar sensitivity be seen in non‐democracies? This paper seeks an answer by assembling a sample of 160 countries that vary across political system and level of development from 1961 to 2015. I find weak and non‐significant differences between regime types, suggesting that both democracies and non‐democracies are concerned about reducing inequality. My findings challenge the logic of prior literature that explain redistribution with the median voter model, a mechanism that should only be found in democracies. I also find that population ageing is related to redistribution in all regimes, reflecting the automatic role of pension programmes more than fears of gerontocracy, where the elderly abuse their voting power to enact unsustainable increases in pension generosity. I suggest that more attention can be paid to the redistributive motivations of political actors in both democracies and non‐democracies and their role in forging social contracts that legitimate the state.