What are the political consequences of increases in income inequality? We present a theoretical model where voters are motivated by ''interests'' and ideological sympathies, while parties are motivated by ideology and the desire to win elections. Given that welfare spending, such as social insurance, are normal goods within each income class, a majority of the voters tend to move rightwards when wage inequality increases. This implies that both the left and the right bloc shift their welfare policy platform towards less generosity. Confronting our arguments with data on the welfare policy platforms of political parties in 22 OECD countries, we find strong support for a rightward shift of the left bloc, while the shift is less clear for the right bloc.
