Identity, Patronage, and Redistribution: Economic Inequality in Bolivia under Evo Morales
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This paper investigates the extent to which the election of Evo Morales and the MAS party is associated with a redistribution of economic resources in favor of indigenous populations in Bolivia. We employ household surveys over the period 2000-2013 and a difference-in-differences framework to study changes in the income distribution. While the analysis period has been one of rapid economic expansion for Bolivia, we show that indigenous groups exhibit significantly higher than average income and expenditure growth in the post-election period, closing roughly one-quarter of the income gap with non-indigenous households. These benefits appear to accrue for most indigenous populations and we find no robust evidence of a preferential impact on any one specific indigenous group. We corroborate these findings with placebo tests and with estimates of economic activity from satellite measures of night-time lighting paired with census maps of ethnic composition.Keywords:
Redistribution
We use an infinite-dimensional Lotka–Volterra model to analyze production, accumulation, and redistribution of wealth in an economy. We show that, if the amount of wealth produced in the economy is small relative to the amount redistributed, the eventual distribution of wealth will be extremely unequal, with all of it being concentrated in single hands in the limit case. The winner’s identity is determined by his ability to redistribute and produce wealth. Similar outcomes are observed in some physical processes. Article is published in the authors’ wording.
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A main activity of the state is to redistribute resources. Models of the political process generally predict that a rise in inequality will lead to more redistribution. This paper shows that, for the UK in the period 1983-2004, a plausibly exogenous rise in income inequality has not been associated with increased redistribution. We then explore this further using attitudinal data. We show that the demand for redistribution, having shown considerable variation over time, is at an all-time low. We argue that the decline in the demand for redistribution can mostly be accounted for by an increasing belief in the importance of incentives though changes in preferences over the distribution of income have been important in some sub-periods.
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Abstract A vast literature documents that wealth inequality has risen throughout advanced democracies, especially the accumulation of wealth among the rich. Yet, instead of increasing wealth redistribution, governments have done the seemingly opposite. Key to understanding why democratic governments do not increase wealth redistribution in times of rising inequalities is to shed light on the public’s preferences. In this paper, we map the public’s redistributive preferences in fourteen countries based on new survey data. We show that traditional socioeconomic cleavages in preferences for wealth redistribution are undermined by diverging mobility expectations. People who expect to climb up the wealth distribution, mostly lower wealth groups, are less supportive of redistribution than people with high stakes of major wealth losses, mainly upper wealth groups. We show that future expectations among the rich and the poor have a highly moderating role for the class conflict over wealth redistribution. Moreover, the middle class, the decisive group in democracies, is highly unresponsive to future prospects. The findings suggest that the middle class does not have much to lose or to win, and therefore, wealth redistribution is of low salience among this group.
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This paper analyses how income redistribution affects inequality in a society in which individuals differ in their earning abilities and their preferences for consumption and leisure. After discussing the shortcomings of various standard approaches, I measure inequality in such a heterogeneous society by the inequality in individuals' so‐called equivalent wages. This approach suggests that redistribution tends to reduce inequality by transferring income from high‐ability to low‐ability individuals, but to increase inequality by transferring income from consumption‐loving to leisure‐loving individuals. These countervailing effects lead in all my simulations to a U‐shaped relationship between redistribution and inequality.
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Abstract Income inequality has increased dramatically in the United States, yet public support for redistribution has not. The authors of this chapter theorize that mistaken beliefs about income inequality contribute to citizens’ lack of demand for greater redistribution, and that correcting these beliefs can help citizens connect their value for greater equality to their preferences for redistribution. To test their theory, they conduct a survey that measures citizens’ beliefs about income inequality and then randomly assigns them to receive factual or partisan information before expressing their support for redistributive policies. The survey found that citizens believe that income is distributed much more equitably than it actually is and that, in the absence of information, their preferences for redistribution are unrelated to whether or not they value greater equality. When citizens receive accurate information about income inequality, however, they connect their value for greater equality to their preferences for redistribution, even when their partisan allegiances recommend otherwise.
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What do we know about wealth inequality and democracy? Our review shows that the simple conjectures that democracy produces wealth equality and that wealth inequality leads to democratic failure are not supported by the evidence. Why are democracy and high levels of wealth inequality sustainable together? Three key features of democratic politics can make this outcome possible. When societies are divided along cleavages other than wealth, this can inhibit the adoption of wealth-equalizing policies. Likewise, voter preferences for the redistribution of wealth depend on the beliefs they form about the fairness of these measures, and some voters without wealth may feel that redistribution is unfair. Finally, wealth-equalizing policies may be absent if the democratic process is captured by the rich; however, the evidence explaining when, where, and why capture accounts for variation in wealth inequality is less convincing than is often claimed. This phenomenon is a useful avenue for future research.
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We empirically investigate the relationship between income inequality and redistribution, accounting for the shape of the income distribution, different development levels, and subjective perceptions. Cross-national inequality datasets that have become available only recently allow for the assessment of the link for various sample compositions and several model specifications. Our results confirm the Meltzer-Richard hypothesis, but suggest that the relation between market inequality and redistribution is even stronger when using perceived inequality measures. The findings emphasize a decisive role of the middle class, though also approving a negative impact of top incomes. The Meltzer-Richard effect is less pronounced in developing economies with less sophisticated political rights, illustrating that it is the political channel through which higher inequality translates into more redistribution.
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South Africa’s apartheid regime created terrible inequalities in incomes and wealth. Indeed, that was arguably its purpose – to keep the wealth in the hands of the white minority. There were all so...
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The present paper seeks to explain the pattern of income redistribution in a globalised world of increased market income inequality and lower costs of factor mobility. In some countries, larger market income inequality has been met by an increased redistributive effort, thus keeping the distribution of disposable incomes relatively stable. In other countries, larger market inequality has been accompanied by a reduction in transfers, thus leading to growth in disposable income inequality. In our model, the initial level of market income inequality is crucial in explaining how an increase in this variable affects redistribution.
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