Inequality and Redistribution: The Impact of Representation

Standard political economy models predict a positive relationship between economic inequality and redistribution, but recent empirical work has found the opposite: in many countries inequality is increasing without a corresponding expansion of redistribution. In this paper we argue that the explanation for this counter-intuitive finding is that the impact of inequality on redistribution depends on the quality of representation. Where the poor – who prefer more redistribution – are better represented, the correlation between inequality and redistribution should be stronger, and vice versa. In order to test this argument, we use a novel method of measuring the quality of representation in the EU member states. First, we map the redistributive preferences of diverse societal groups and identify differences between voters and countries. Second, we analyze differences in quality of representation with respect to preferences for redistribution. Finally, we explain differences in redistribution by accounting for inequality and congruence.