Income Inequality and Redistributive Government Spending

January 1, 2003

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Income Inequality and Redistributive Government Spending, (USA: International Monetary Fund, 2003) accessed April 7, 2025

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The paper examines empirically the question of whether more unequal societies spend more on income redistribution than their more egalitarian counterparts. Theoretical arguments on this issue are inconclusive. The political economy literature suggests that redistributive spending is higher in unequal societies due to median voter preferences. Alternatively, it can be argued that unequal societies may spend less on redistribution because of capital market imperfections. Based on different data sources, the cross-country evidence reported in this paper suggests that more unequal societies do spend less on redistribution.

Subject: Expenditure, Income distribution, Income inequality, National accounts, Personal income

Keywords: After-tax income, Asia and Pacific, Capital deepening, East Asia, Factor income, GDP, Gini coefficient, Government spending, Growth equation, Income, Income distribution, Income distribution indicator, Income inequality, Income share, Inequality data, Inequality indicator, Inequality-redistribution hypothesis, Low-inequality country, Parameter estimate, Personal income, Redistributive spending, Spending, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/014
Stock No:

WPIEA0142003
ISBN:

9781451843149
ISSN:

1018-5941

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