Public income redistribution and political economy

Over the last decades government income redistribution cushioned the growing disparity in the distribution of market incomes in most developed countries. The efforts governments take to absorb market inequality vary both international and inter-temporal. What explains this variation? Redistributive public policies according to the Median voter-model result not only from political demand of the poor, but of middle class voters, harmed by growing inequality, given a country is a democracy and public policy decided by majorities. This controversial model has been enlarged by political power and (social) political institutions setting incentives for coalition building, since policies decide whose demand is transformed into actual programs. All approaches focus on the coalitions constituted by middle classes and either the lower or upper classes. Recent approaches combined changing income structures and the propensity of redistributive coalitions. Affinity within the income distribution would foster political coalitions. This contribution tests affinity, political power and institutional explanations based on micro-data from the Luxembourg Income Study on the development of the market income distribution and government redistribution in 19 countries between 1980 and 2005. Descriptive analysis showed that income distances between middle income and lower income groups did not decrease but widened. Thus 'affinity' is not the basis of similar voter demands. According to multivariate analysis the incentives for cross class coalitions set by political institutions are less relevant than voter turnout.