## wpiea2021082-print-pdf — References (summary)

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### Introduction: scope and framing
- Focus: income inequality and political economy interactions — demand and supply of redistribution, links with political ideologies, and potential tipping points (including COVID-19).
- Key themes:
  - Perception that growth increasingly benefits a privileged few despite rising living standards since World War II.
  - Drivers of widening inequality: technological change favoring the highly-skilled; decline of unions; deregulation of financial markets; rise of market power of few firms/individuals; globalization and relocation of production; migration.
  - Policy content consensus emphasizes investing in local communities, creating “good jobs,” and improving deliberation and communications to rebuild trust in public institutions.
  - Process emphasis: representative and democratic participation is key to legitimacy of reforms.

### Demand for Redistribution: preferences, participation, and perceptions
- Theoretical anchor:
  - Median voter theorem implication: democracy leads to more redistribution when the median voter income is below the mean (Meltzer and Richard, 1981).
- Empirical findings on participation and turnout:
  - Turnout gap (United States): 23.6 percentage points between richest and poorest quintile (Mahler et al., 2015).
  - Average turnout gap in thirteen other OECD states (elections in 2001–04): 8.4 percentage points.
  - Turnout skew can reduce redistribution if the likely voter’s income is close to or above mean; evidence stronger for European countries; U.S. is an outlier with low bottom-quintile turnout and low social transfers.
  - Enfranchisement experiment: electronic voting in Brazil increased health spending in municipalities (Fujiwara, 2015).
- Other determinants of demand:
  - Expectations about net financial gains, income maximization, risk aversion, and concerns about inefficient taxation.
  - Job losses and perceived insecurity raise welfare-spending support (Margalit, 2013; Martén, 2019); sensitivity higher for ages 18–24.
  - Habituation: living in highly unequal societies may reduce support for redistribution after controlling for income and demographics (Roth and Wohlfart, 2018).
  - Beliefs about determinants of success shape preferences: attribution to luck/innate traits increases support for redistribution; attribution to hard work reduces it (Alesina, Stantcheva, and Teso, 2017).
  - Information effects: perceptions often matter more than facts; informational treatments can change views about inequality but have limited policy-preference effects when trust in government is low (Kuziemko et al., 2015).

### Supply of Redistribution: instruments, capacity, and welfare regimes
- Supply factors: policy objectives, administrative capacity, political systems, legacy welfare institutions, and influence of groups that lose from redistribution.
- Advanced vs developing economies:
  - Large differences in redistribution reflect differences in tax instrument use and fiscal/administrative capacity; data scarcity on in-kind benefits complicates incidence analysis.
- Implicit redistribution (“pre-distribution”) vs explicit redistribution:
  - Pre-distribution: policies shaping endowments and market income generation (e.g., minimum wages, anti-discrimination laws, competition policy).
  - Explicit redistribution: taxes and transfers; who is taxed and who benefits matters for outcomes.
- Welfare-state typology:
  - Nordic/social democratic: universal access, limited private market role.
  - Anglo-Saxon/liberal: minimal public intervention, market role emphasized.
  - Conservative/corporatist: reliance on social insurance, family, churches.
- Measuring pro-poorness and magnitude of social spending:
  - Qualitative features that matter: coverage, progressivity, generosity; market-to-net Gini underestimates government effort because in-kind benefits are often omitted.
  - Among OECD countries, social spending (cash + in-kind + tax breaks with social purposes) is on average above 20 percent of GDP.
  - Pensions are the largest public spending item at 8 percent of GDP across the OECD.
  - EU (2018): expenditure on social protection in 28 Member States was 18.6 percent of GDP; 40.6 percent of total expenditure; around 90 percent was cash benefits and services in kind.
- Cross-country 2000–2018 observation:
  - Social protection spending rose in half of the EU sample countries and fell in the other half; inequality increased equally among both groups approximately two-thirds of the time.
  - Composition shifted: cash transfers reduced on average while in-kind support (primarily health care) increased.
- Developing countries:
  - Social protection much lower; coverage via public programs often below 20 percent without private transfers.
  - Adequacy of benefits higher in developed than developing countries.
  - Fiscal systems can be inequality-reducing but poverty-increasing depending on tax/spending design.

### Political regimes, institutions, and redistribution outcomes
- Electoral systems and redistribution:
  - Proportional representation tends to favor more redistribution via broader coalitions including parties catering to the poor; majoritarian systems tend to favor less.
  - Electoral systems may explain up to half of differences in redistribution between Europe and the United States between 1990 and 2000 (Alesina, Glaeser, Sacerdote; Alesina and Glaeser).
- Changing political cleavages:
  - Shift from class-based coalitions to cleavages based on education, globalization exposure, and identity (Piketty, 2018); new coalitions labeled “globalists” (high-education, high-income) vs “nativists” (low-education, low-income).
- Populism:
  - Causes: economic insecurity, threats to national identity, and unresponsive political systems.
  - Right-wing populism: nativist emphasis; left-wing populism: calls for major redistribution.
  - Vote share trend in Europe: populist parties rose from 7 percent in the early 2000s to about 25 percent in 2018 (one in four voted for a populist party in 2018).
- Outcomes and risks under populism:
  - Historical Latin American “classical” populism: redistribution via expansionary fiscal/monetary policy often led to macro crises and did not sustain inequality reduction.
  - “New” populism (post-1990s): microeconomic intervention, protectionism, mandatory minimum wages, constitutional changes in some cases; mixed records on sustainability and macro stability.
  - Tipping-point concerns: populism can be self-sustaining through harnessing discontent, weakening checks on power, and restraining civil rights.
  - Democratic quality: more democracies than non-democracies historically, but stagnation and decline among top-scoring democracies and widening gaps between high-scoring democracies and those just above democratic thresholds.

### The “How” and “When” of Redistribution: strategies, constraints, and timing
- Pre-distribution vs redistribution:
  - Pre-distribution aims to produce a more equal distribution of economic power and rewards (Hacker, 2012); redistribution taxes winners to compensate losers and is viewed by some as “second best.”
  - Tony Atkinson proposals: public employment, minimum wages, encouraging innovation for employment, and competition policies.
  - Rodrik taxonomy: pre-redistributive and redistributive measures depend on targeting bottom, middle, or top of income/wealth distribution.
- Constraints on reforms:
  - Economic trade-off: efficiency vs equity (“leaky bucket”); evidence of a trade-off along the efficiency frontier but room to improve both in many countries.
  - Political limits: “political-loser hypothesis” — powerful groups that lose from reforms can block them.
  - Climate policy example: concentrated losses and dispersed benefits, intergenerational equity issues, and short political horizons hinder reforms.
- Lessons from international experience:
  - Crises can favor reforms but evidence is mixed; outcomes depend on political equilibrium and reform type.
  - Sequencing, timing (e.g., elections), and using crises as windows of opportunity are common strategies.
  - Mitigation measures increase acceptability (example: Indonesia fuel subsidy reforms coupled with unconditional cash transfers).
  - Reform design matters: progressive taxation and protecting social benefits mitigate inequality increases during fiscal consolidation.
  - Broad public consultations and communications improve reform prospects (examples: Danish tax reform; Iran subsidy removal communications).
- COVID-19 implications:
  - Pandemic exposed and exacerbated inequities; disproportionate impact on lower-income individuals and on jobs less amenable to teleworking.
  - Projections indicate significant increases in poverty, with uncertainty over persistence.
  - Public benefits in some countries (e.g., Spain) mitigated COVID-19 effects on inequality.
  - Policy responses constrained by low growth, high government debt, and declining trust in institutions.
  - Growing debate on rethinking capitalism and social contracts post-pandemic.

### Policy options and recommendations (operational guidance)
- Broad policy directions:
  - Invest in local communities: “inclusive localism” targeting economic viability and reduced spatial disparities.
  - Help create “good jobs”: public investment in regions outside superstar cities; government intervention to build a good-jobs economy.
  - Improve deliberation and communications: whole-of-society approaches, broad consultations, and transparent communications to rebuild trust.
- Reform design and sequencing:
  - Use crises and electoral timing judiciously to implement reforms.
  - Bundle reforms and include compensating measures to reduce opposition.
  - Prioritize progressive taxation, protection of vulnerable social benefits, and education/training to mitigate inequality during fiscal adjustments.

### Concluding observations
- Inequality and redistribution outcomes are shaped by complex interactions among preferences, politics, and economics.
- Best-performing countries combine a welfare state that invests in people, stimulates activity, and provides protection.
- Creating a political system that gives voice to broad social cohesion requires education, mobilization, and organization of voters to prioritize economic interests.
- Practical emphasis: search for local solutions complemented by policies that favor “good jobs” and improved deliberation/communication to rebuild trust.

*Source: wpiea2021082-print-pdf — References.*

### References..............................................................................................................

### wpiea2021082-print-pdf - References..............................................................................................................

### Introduction
- Inclusive growth concerns: growth since World War II has raised living standards but a perception persists that growth increasingly benefits a privileged few.
- Factors contributing to widening inequality: technological changes favoring the highly-skilled; decline of unions; deregulation of financial markets; rise of market power of few firms/individuals; globalization and relocation of production; migration.
- Policy matters: Ostry, Loungani, and Berg (2019) argue increased inequality has been a choice, not inevitable.
- Focus of the paper: income inequality and political economy interactions (demand and supply of redistribution, link with political ideologies, potential tipping points including COVID-19).
- Emerging consensus on policy content: invest in local communities; help creation of “good jobs”; improve deliberations and communications to rebuild trust in public institutions.
- Process emphasis: representative and democratic participation is key for legitimacy of reforms.

### Demand for Redistribution: Theory and Practice
- Median voter theorem implication: democracy leads to more redistribution when the median voter income is below the mean (Meltzer and Richard, 1981).
- Historical support: franchise extension in 19th-century Western countries accompanied by redistributive reforms and social spending expansion.
- Empirical nuances:
  - Democracies on average have higher taxes and lower inequality, but exceptions exist (e.g., former communist economies, South Africa).
  - “Robin Hood Paradox”: some high-inequality countries have less redistributive policies than more egalitarian ones.
- Political participation and turnout:
  - Turnout gap United States: 23.6 percentage points between richest and poorest quintile (Mahler et al., 2015); average in thirteen other OECD states: 8.4 percentage points for elections in 2001–04.
  - Voter turnout skew can reduce redistribution if the likely voter’s income is close to or above mean.
  - Evidence on higher turnout increasing redistribution is mixed and stronger for European countries; U.S. is an outlier with low bottom-quintile turnout and low social transfers.
  - Enfranchisement experiments (e.g., electronic voting in Brazil) increased health spending in municipalities (Fujiwara, 2015).
- Other factors shaping preferences:
  - Expectations about net financial gains, income maximization, risk aversion, concerns about inefficient taxation.
  - Economic conditions and risk aversion: job losses and perceived insecurity increase welfare spending support (Margalit, 2013; Martén, 2019); sensitivity higher for ages 18–24.
  - Habituation effects: living in highly unequal societies may reduce support for redistribution after controlling for income and demographics (Roth and Wohlfart, 2018).
  - Beliefs about determinants of success: if success is attributed to luck/innate traits, support for redistribution is higher; if to hard work, support is lower (Alesina, Stantcheva, and Teso, 2017).
  - Perceptions matter often more than facts; informational treatments change views about inequality but have limited effects on policy preferences when trust in government is low (Kuziemko et al., 2015).

### The ‘Supply’ of Redistribution
- Supply factors: policy objectives, administrative capacity, political systems, legacy welfare institutions, and influence of groups who lose from redistribution.
- Advanced vs. developing economies:
  - Large differences in redistribution reflect tax instrument use and fiscal/administrative capacity.
  - Data scarcity (especially in-kind benefits) complicates full incidence analysis.
- Role of implicit redistribution (“pre-distribution”) vs. explicit redistribution:
  - Pre-distribution: policies that affect endowments and market income generation (e.g., minimum wages, anti-discrimination laws, competition policy).
  - Explicit redistribution: taxes and transfers; who is taxed and who benefits matters.
- Welfare state typology:
  - Nordic/social democratic: universal access, limited private market role.
  - Anglo-Saxon/liberal: minimal public intervention, market role emphasized.
  - Conservative/corporatist: reliance on social insurance, family, churches.
- Measuring pro-poorness:
  - Qualitative features matter: coverage, progressivity, generosity.
  - Market-to-net Gini underestimates government effort because in-kind benefits often omitted from household surveys.
  - Among OECD countries, social spending (cash + in-kind + tax breaks with social purposes) is on average above 20 percent of GDP.
  - Pensions: largest public spending item at 8 percent of GDP across the OECD.
- EU specifics (2018):
  - Expenditure on social protection in 28 EU Member States: 18.6 percent of GDP; 40.6 percent of total expenditure; around 90 percent was cash benefits and services in kind.
- Cross-country observations (2000–2018):
  - Social protection spending rose in half of EU sample countries and fell in the other half; inequality increased equally among both groups approximately two-thirds of the time.
  - Composition shifted: cash transfers reduced on average while in-kind support (primarily health care) increased.
- Developing countries:
  - Social protection much lower; coverage via public programs often below 20 percent without private transfers.
  - Adequacy of benefits higher in developed than developing countries.
  - Fiscal systems can be inequality-reducing but poverty-increasing depending on tax/spending design.

### Which Political Regimes Deliver More Redistribution?
- Electoral systems:
  - Proportional representation tends to favor more redistribution via broader coalitions including parties catering to the poor; majoritarian systems tend to favor less.
  - Up to half of differences in redistribution between Europe and the United States between 1990 and 2000 may be explained by electoral systems (Alesina, Glaeser, Sacerdote; Alesina and Glaeser).
- Changing political cleavages:
  - Shift from class-based coalitions to cleavages based on education, globalization exposure, and identity (Piketty, 2018).
  - New coalitions: “globalists” (high-education, high-income) vs “nativists” (low-education, low-income).
- Populism:
  - Populism arises from economic insecurity, threats to national identity, and unresponsive political systems.
  - Right-wing populism characterized by nativism; left-wing populism by calls for major redistribution.
  - European trend: populist parties’ vote share rose from 7 percent in early 2000s to about 25 percent in 2018 (one in four voted for a populist party in 2018).
  - Drivers: inequality, disappointed expectations, switching social identities, economic dislocations exploited by populists.
- Outcomes under populism:
  - Historical “classical” populism in Latin America: redistribution via expansionary fiscal/monetary policies often ended in macro crises and did not sustain inequality reduction.
  - “New” populism (post-1990s) focuses on microeconomic intervention, protectionism, mandatory minimum wages, and constitutional changes in some cases.
  - Mixed records: Bolivia (2006–19) saw reduction in extreme poverty and stable macro indicators, but broader regional improvements complicate attribution; later political developments raise questions about sustainability.
- Tipping point concerns:
  - Populism can be self-sustaining: lack of results, harnessing discontent, weakened checks on power, and restrained civil rights.
  - Global trend: more democracies than non-democracies historically, but stagnation and decline at the top-scoring democracies; widening gap between high-scoring democracies and those just above threshold.

### The ‘How’ and ‘When’ of Redistribution
- Pre-distribution vs redistribution:
  - Pre-distribution: market reforms to produce a more equal distribution of economic power and rewards (Hacker, 2012).
  - Redistribution: taxing winners to compensate losers; considered “second bests” by some critics.
  - Tony Atkinson’s proposals include public employment, minimum wages, encouraging innovation for employment, and competition policies.
  - Rodrik taxonomy: pre-redistributive and redistributive measures depend on targeting bottom, middle, or top of income/wealth distribution.
- Constraints:
  - Economic trade-off: efficiency vs equity (“leaky bucket”); evidence of a trade-off along the efficiency frontier but scope to improve both in many countries.
  - Political limits: “political-loser hypothesis” — powerful groups that lose from reforms can block them.
  - Climate policy exemplifies concentrated losses and dispersed benefits, intergenerational equity issues, and short political horizons as obstacles.
- Lessons from international experience:
  - Crises can favor reforms but evidence is mixed; depends on political equilibrium and reform type.
  - Sequencing, timing (e.g., elections), and using crises as windows of opportunity are common strategies.
  - Mitigation measures increase acceptability (e.g., Indonesia fuel subsidy reforms coupled with unconditional cash transfers).
  - Reform design matters: progressive taxation and protecting social benefits mitigate inequality increases during fiscal consolidation.
  - Broad public consultations and communications improve reform prospects (Danish tax reform example; Iran subsidy removal communications).
- COVID-19 as a potential game changer:
  - Pandemic exposed and exacerbated inequities; disproportionate impact on lower-income individuals and jobs less amenable to teleworking.
  - Projections indicate significant increases in poverty, with uncertainty over persistence.
  - Public benefits in some countries (e.g., Spain) mitigated COVID-19 effects on inequality.
  - Policy responses constrained by low growth, high government debt, and declining trust in institutions.
  - Debate on rethinking capitalism and social contracts post-pandemic is growing.

### Policy Options and Recommendations
- Broad policy directions supported in the literature:
  - Invest in local communities: “inclusive localism” targeting economic viability and reduced spatial disparities.
  - Help create “good jobs”: public investment in regions outside superstar cities; government intervention to build a good jobs economy.
  - Improve deliberation and communications: whole-of-society approaches, broad consultations, transparent communications to rebuild trust.
- Reform design and sequencing:
  - Use crises and electoral timing judiciously to implement reforms.
  - Bundle reforms and include compensating measures to reduce opposition.
  - Prioritize progressive taxation, protection of vulnerable social benefits, and education/training to mitigate inequality during fiscal adjustments.

### Concluding Remarks
- Complex interactions among preferences, politics, and economics shape inequality and redistribution outcomes.
- Best-performing countries combine a welfare state that invests in people, stimulates activity, and provides protection.
- Creating a political system that gives voice to broad social cohesion requires education, mobilization, and organization of voters to prioritize economic interests.
- Practical approach: search for local solutions complemented by policies that favor “good jobs” and improved deliberation/communication to rebuild trust.

*Source: wpiea2021082-print-pdf - References..............................................................................................................*

### 1453. http://www.ecineq.org/ecineq_paris19/papers_EcineqPSE/paper_154.pdf

### 1453. http://www.ecineq.org/ecineq_paris19/papers_EcineqPSE/paper_154.pdf

### Major thematic areas covered in the referenced literature
- Populism and political economy
  - Key references: Cardoso and Hellweger 1991; Dornbusch and Edwards 1991; Edwards 2019; Guiso et al. 2017; Weyland 2001; Mudde 2004; Inglehart and Norris 2016; Tabellini 2019; Johnson 2019a; Kaltwasser 2014; De Bolle and Zettelmeyer 2019.
  - Topics: macroeconomics of populism, political responses to economic grievance, demand and supply of populism, populists in power, populist effects on democracy.

- Inequality, redistribution, and social policy preferences
  - Key references: Ostry, Berg, and Tsangarides 2014 (SDN 14/02); Dabla-Norris et al. 2015 (SDN15/13); IMF publications: “Who let the Gini out?” 2013a; “Taxing Times” Fiscal Monitor 2013b; “Fiscal Policy and Income Inequality” 2014 Policy Paper; “Tacking Inequality” Fiscal Monitor 2017a; “Age of Insecurity: Rethinking the Social Contract” Finance and Development 2018; IMF Policy Paper No. 19/016 (2019a); “Reallocating Public Spending to Reduce Income Inequality: Can it Work? Working Paper” 2019b; “How to Mitigate Climate Change” Fiscal Monitor 2019c; World Economic Outlook (October) 2020 Box 1.2.
  - Topics: causes and consequences of income inequality, fiscal policy and income redistribution, social spending strategies, reallocation of public spending, inclusiveness in emerging and developing economies, COVID-19 impacts on inequality.

- Preferences for redistribution, perception, and behavioral drivers
  - Key references: Kuziemko et al. 2013 (No. w18865); Charité, Fisman, and Kuziemko 2015 (No. w21009); Cruces, Perez-Truglia, Tetaz 2013; Roth and Wohlfart 2018; Karadja et al. 2017; Martén 2019; Margalit 2013; Kenworthy and McCall 2007; Dahlberg, Edmark, and Lundqvist 2012; Cavaillé and Trump 2015; Cavaillé and Ferwerda 2018; Fong, Bowles, and Gintis 2003.
  - Topics: reference points and redistributive preferences, biased perceptions of income distribution, experienced inequality and support for redistribution, how distributional conflict over in-kind benefits affects political preferences.

- Political institutions, electoral rules, and redistribution outcomes
  - Key references: Iversen and Soskice 2006; Persson and Tabellini 1999, 2000, 2003; Meltzer and Richard 1981; Persson and Tabellini (multiple works); Kuziemko et al. 2013; Ciminelli et al. 2019 (SDN19/08); Chin 2019.
  - Topics: how electoral institutions shape political coalitions and redistribution; size and scope of government with rational politicians; political cost of reforms.

- Public finance, taxation, and reform costs
  - Key references: Chen, Dabla-Norris, Rappaport, and Zdzienicka 2019 (IMF Working Paper 19/298); Clements et al. 2013; Coady, Parry, and Shang 2018; Davoodi, Tiongson, and Asawanuchit 2003 (WP 03/227); Jones 2019 (No. w25725).
  - Topics: political costs of tax-based consolidations, energy subsidy reforms, benefit incidence analyses, taxing top incomes.

- Crises, pandemics, and distributional effects
  - Key references: Furceri, Loungani, and Ostry 2020; Sumner, Ortiz-Juarez, and Hoy 2020; World Bank 2000, 2015, 2017; Robinson 2009; Florini and Sharma 2020; McKinsey Global Institute 2017.
  - Topics: how pandemics leave the poor farther behind, precarity and COVID-19 impacts on poverty, crisis implications for developing countries, systemic hazards.

- Cross-national and historical perspectives on inequality and welfare states
  - Key references: Esping‐Andersen 1989; Korpi and Palme 1998; Lindert 2004, 2017; Milanovic 1998, 2017; Lindert 2017; Leibbrandt et al. 2010; Haller et al. 2016; Mollerström 2016.
  - Topics: welfare state regimes, paradox of redistribution, long-run public spending and growth, ethnic stratification and income inequality.

### Representative empirical and methodological contributions listed
- Randomized survey experiments and NBER working papers:
  - Kuziemko et al. 2013 (No. w18865).
  - Charité, Fisman, Kuziemko 2015 (No. w21009).
  - Giuliano and Spilimbergo 2014 (No. w15321).
  - Glaeser, Ponzetto, and Shapiro 2005.
- IMF staff notes and working papers:
  - Ciminelli, Furceri, Ge, and Ostry 2019 (SDN19/08).
  - Chen, Dabla-Norris, Rappaport, and Zdzienicka 2019 (IMF Working Paper 19/298).
  - Davoodi, Tiongson, and Asawanuchit 2003 (IMF Working Paper 03/227).
  - Ostry, Berg, and Tsangarides 2014 (SDN 14/02).
- Policy-oriented syntheses and books:
  - Ostry, Loungani, and Berg 2019. Confronting Inequality.
  - Collier 2018. The Future of Capitalism.
  - Piketty 2018 (WID World Working Paper Series 2018/7).
  - Sandbu 2020. The economics of belonging.

### Recurring policy-relevant themes and considerations (as reflected by the referenced works)
- Political cost and feasibility of reforms:
  - Distributional impacts and political resistance shape reform design (Ciminelli et al. 2019; Chen et al. 2019).
- Role of perceptions and information:
  - Biased perceptions of income distribution affect preferences for redistribution (Cruces et al. 2013; Kuziemko et al. 2013).
- Importance of institutional design:
  - Electoral rules and institutional settings determine coalition formation and redistribution outcomes (Iversen and Soskice 2006; Persson and Tabellini 1999, 2000, 2003).
- Crisis management and inclusiveness:
  - Pandemics and crises exacerbate inequality; policy responses influence long-term inclusiveness (Furceri et al. 2020; Sumner et al. 2020; IMF World Economic Outlook October 2020 Box 1.2).
- Redistribution instruments and welfare-state strategies:
  - Taxation, public spending reallocation, and in-kind benefit design are central levers (IMF 2019b; Clements et al. 2013; Coady et al. 2018).

*Compilation based on the reference list excerpt from the specified content unit.*

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_Source: https://www.imf.org/-/media/files/publications/wp/2021/english/wpiea2021082-print-pdf.pdf_