Working Paper

On Political and Economic Determinants of Redistribution: Economic Gains, Ideological Gains, or Institutions?

Abstract: I describe a structural method to quantify the contribution of different elements of social choice to the level of redistribution. Estimating a DSGE model with microdata on the support for redistribution, I find that if voters disregarded their ideological views on welfare policies, redistribution in the U.S. would increase 117%. Because ideology is a more important determinant of voting behavior than income, increasing voter turnout or capping campaign contributions would have a small effect on redistribution. Among the drivers of ideology, I find that racial animosity and distrust of the government contributes to an 80% and 44% smaller redistribution, respectively.

Keywords: Redistribution; Prefereces for Redistribution; Dynamic Macro Models of Political-Economoy;

JEL Classification: E69; H11; P16;

Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Working Paper Series

Publication Date: 2022-10-05

Number: WP 2022-47