State Policy and Inequality: Why Do Some States Redistribute More Than Others?

The aim of this study was to analyze variation in income inequality patterns between Brazilian states as a consequence of the political and institutional framework. The article contends that state-level political factors affect income redistribution through the promotion of human capital, i.e., investment in education, and investment in professional training policies or even policies to make regional areas more attractive to private investment. The study covers all states of Brazil and the Federal District from 1992 to 2006 and uses Prais-Winsten regression model estimations with panel corrected standard error (PCSE-AR1). The results show that despite the restrictions imposed on the states in this period, political competition and political parties at the state level of government produced different redistribution patterns. However, the article shows controversial results as to the role of the left and suggests the need for further research.