The Impact of Taxes on Growth and Distribution in Developed Capitalist Countries: A Cross-National Study

193

This paper presents the first systematic, empirical examination of the impact of constitutional structures on income inequality among eighteen OECD countries. Our pooled time series/cross-sectional panel analysis (n = 18, t = 2) reveals that consensual political institutions are systematically related to lower income inequalities while the reverse is true for majoritarian political institutions. We also make a crucial distinction between 'collective' and 'competitive' veto points. Our multiple regression results provide strong evidence that collective veto points depress income inequalities while competitive veto points tend to widen the inequality of incomes. Thus, some institutional veto points have constraining effects on policy while others have 'enabling' effects.

Section: Introductionmentioning

confidence: 99%

The impact of constitutional structures and collective and competitive veto points on income inequality in industrialized democracies

Birchfield

Crepaz

1998

193

“…Over the last decade a relatively sizable body of research has been generated on this question (see, e.g. van Arnhem and Schotsman, 1982;Borg and Castles, 1981;Dryzek, 1978;Hewitt, 1977;Hicks and Swank, 1984b;Jackman, 1980b;Katz, Mahler, and Franz, 1983;Stack, 1979;Stephens, 1979). However, because reasonably reliable and comparable data have been available for only a subset of approximately one-half to two-thirds of the population, empirical tests of hypotheses often have been confined to bivariate correlations, which are inconclusive.…”

mentioning

confidence: 99%

Distribution of income in advanced capitalist states: political parties, labour unions, and the international economy

Muller

1989

Abstract. Hypotheses about determinants of income inequality in advanced capitalist societies are tested with data from the World Bank for 1975–80 across virtually the complete population. The results support most of the propositions of a model that takes into account differences in partisan control of government, the organization strength of labour, and the openness of the economy to international market forces. Hypotheses derived from global models of income distribution are not supported. The major findings are (1) that labour organization has no direct effect on income inequality; (2) that strong socialist parties have a negative effect on the size of the gap between the rich and the poor but no effect on the gap between the rich and the middle class; (3) that the governmental strength of conservative parties is unrelated to the size of the gap between the rich and the poor but has a very strong positive effect on the gap between the rich and the middle class; and (4) that, regardless of partisan control of government, relatively small trade dependent economies are more egalitarian than relatively large economies which are less dependent on international trade.

“…Unfortunately, the empirical findings are also conflicting. Some econometric studies suggest that public sector size has either a positive or no effect on economic growth (Cullis & Jones 1987;Whiteley 1986;Katz et al 1983;Castles & Dowrick 1990;Ram 1987;Friedland & Sanders 1985). Others report a negative effect (Landau 1985;Saunders 1985;Weede 1986).…”

Section: Hypothesis 4c Public Sector Growth Affects Economic Growth mentioning

confidence: 99%

The impact of parties, economic growth, and public sector expansion: a comparison of long–term dynamics in the scandinavian and anglo–american democracies

Midtbø

1999

This paper discusses (1) the extent to which the partisan composition of government affects economic policies and macroeconomic outcomes, and (2) the interrelationship between public spending, taxation and economic growth. These two issues are connected. Since target variables and instruments affect each other reciprocally, the specification of the partisan model should encompass both a reaction function and an outcome function. A pooled vector autoregressive model suggests that during the last century left-wing governments in the United States, Britain and Canada have reinforced the growth of both public spending and GNP. Only public sector expansion is affected by partisanship in Denmark, Norway and Sweden. In the Anglo-American countries changes in spending occur before changes in economic growth in terms of a lagged crowding out effect. Spending and revenues appear to affect each other reciprocally. By contrast, public sector expansion in Scandinavia stimulates growth, while taxation leads spending.