Published in:
The Economic Journal 2015
DOI: 10.1111/ecoj.12318
Abstract:
We investigate how electoral competition affects the income distribution in society. We utilise a standard probabilistic voting setup where parties compete at two stages. Our model delivers that greater electoral competition in a district results in equalization of incomes therein. We check for these relationships using data from Indian national elections which are combined with consumption expenditure data rounds from NSSO (1987-88 and 2004-05) to yield a district level panel. Our OLS, 2-SLS and IIV analyses consistently inform that close elections lead to lower inequality and polarization indicating a larger middle class.