Electoral Systems and Income Inequality: A Tale of Political Equality

Abstract

Political economy literature has so far failed to offer a consensus on the effect of political institutions such as regime type (democracy vs. autocracy) and electoral systems (majori- tarian vs. proportional representation) on within-country income inequality. Beyond the inequality effects of these de jure political institutions, this paper fi nds robust evidence that de facto distribution of political power crucially matters to income inequality. Based on a panel database of 121 countries for the period from 1960 to 2007, the results consistently associate even distributions of political power across socio-economic groups with lower levels of income inequality. The scale of this effect hinges upon the proportionality of electoral systems. However, regime type and electoral system are not consistently associated with a signi cant impact on income inequality.