The Structure of Inequality and Demand for Redistribution

The paper proposes a new explanation of why PR countries tend to redistribute more than majoritarian countries. Existing explanations (Persson and Tabellini; Iversen and Soskice) focus on the strategic behavior of parties. By contrast, we emphasize that pivotal voters around the median of the income distribution apparently want more redistribution in PR countries and ask why this is so. Our explanation hinges on the idea that median-income earners will be inclined to form a redistributive alliance with low-income voters when the bottom half of the income distribution is compressed and the upper half is dispersed. Using several different statistical models, we show that the 50-10 wage ratio is associated with less redistribution while the 90-50 wage ratio is associated with more redistribution. We argue further that the association between PR and coordinated wage bargaining explains why the income distribution of PR countries is more favorable to redistributive politics.