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GRA 5917: Public Opinion and Input Politics Term Paper Proposal Knut-Eric Joslin

Income inequality , political attractiveness , and income redistribution : An extension of Milanovic (2000) . GRA 5917: Public Opinion and Input Politics Term Paper Proposal Knut-Eric Joslin October 7, 2010. Purpose.

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GRA 5917: Public Opinion and Input Politics Term Paper Proposal Knut-Eric Joslin

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  1. Incomeinequality, politicalattractiveness, and incomeredistribution: An extensionofMilanovic (2000) GRA 5917: Public Opinion and Input Politics Term Paper Proposal Knut-Eric Joslin October 7, 2010

  2. Purpose To empiricallyexaminetherelationshipbetweeninequality and redistributionwhileaccounting for politicallymotivated transfers. Knut-Eric N. Joslin

  3. Theories of Redistribution • Median Voter Theorem • Expectation?Redistribution is contingenton median voter’s (MV) preferences MV max transfer subject to budgetconstraint. • PoliticallyMotivatedRedistribution • Expectation?Certaingroupsof ”swing” votersarepoliticallyattractive for redistribution. Characteristics: Greed and ideology. Meltzer, Allen H. and Scott F. Richard (1981). A RationalTheoryoftheSizeofGovernment. The Journal ofPoliticalEconomy, 89(5): 914-927. Dixit, Avinash and John Londregan (1996). The Determinants ofSuccessof Special Interests in RedistributivePolitics. The Journal ofPolitics, 58(4): 1132-1155. Knut-Eric N. Joslin

  4. Milanovic (2000) • Empiricalinvestigationofincomeredistribution, including MV hypothesis. • Criticizesearlierapproaches T = f(Id, Z) • LIS data solvesspecificationissues • Proposesfactor vs. disposablecomparison R = f(Im, Z) Milanovic (2000). The median-voterhypothesis, incomeinequality, and incomeredistribution: an empirical test withtherequired data. European Journal ofPoliticalEconomy, 16: 367-410. Knut-Eric N. Joslin

  5. An Extension • Purpose? To examinetherelationshipbetweeninequality and redistributionwhileaccounting for politicallymotivated transfers. • The empiricalapproachwillbuildonMilanovic (2000) • Re-estimateMilanovic’sequations, butincludemeasuresof swing voter characteristics. Knut-Eric N. Joslin

  6. ModelSpecification FixedEffectsModel: R = β0 + X*β + ∑i α *Countryi+ eit Here, R = Sharegain, defined for variousgroups (bottom 20% or 50%, median group) Milanovic’sApproach: R = β0 + β1*Position of Median Voterit+ β2*Age Over 65%it + ∑iαi *Countryi Proposal: R = β0t + β1t*Position of Median Voterit+ β2t*Age Over 65%it + β3t*Relative Greedit+ β4t*Relative Cut Pt. Densityit +∑iαi *Countryi Knut-Eric N. Joslin

  7. Data: MeasuringRedistribution • Luxembourg Income Study (LIS) • Factor income = wages + self-employ income + income from capital + gifts • LIS code: V1 + V4 + V5 + V8 + V32 + V33 + V34 + V35 + V36 • Similarly for disposable income • Breakdown by deciles Knut-Eric N. Joslin

  8. Data: Measuring Voter Characteristics • World Value Survey (WVS) and Comparative Study of Electoral Systems (CSES) • “Greed” (strength of ideological affiliation, κ) • WVS E178: Close to a any particular party? Unfortunately, only used in wave EVS1981 (1981 and 1982, limited countries) • CSES A3004, B3028, C3020: Do you think of yourself as close to a party? • Other possibilities from CSES, but different phrasing than WVS • “Cut Point Density” (pol. self-placement wrt median) • WVS E033: Self positioning on Left-Right political scale. Many waves available. • CSES A3031, B3045, C3013: Left-Right self. Knut-Eric N. Joslin

  9. Challenges • Dahlberg and Johansson’s ideal criteria: “Second best” approach for “swing” depends on data • Access to LIS data • Unanticipated statistical issues? Lind points out a “mechanical correlation” in Milanovic Dahlberg, Matz and Eva Johansson (2002). On theVote-PurchasingBehaviorofIncumbentGovernments. American Political Science Review, 96(1): 27-40. Lind, Jo Thori (2005). Why is there so littleredistribution? Nordic Journal ofPoliticalEconomy, 31: 111-125. Knut-Eric N. Joslin

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