Electoral uncertainty, income inequality and the middle Class
Description
We investigate how electoral competition influences income distribution in society. To do so, we employ a standard probabilistic voting framework in which political parties compete over two stages. Our model predicts that greater electoral competition within a district leads to a more equal distribution of income. We empirically test these predictions using data from Indian national elections, combined with consumption expenditure data from two rounds of the National Sample Survey Organisation (NSSO) (1987–88 and 2004–05), to construct a district-level panel dataset. Our results, based on Ordinary Least Squares (OLS), Two-Stage Least Squares (2SLS), and Instrumental Variables (IV) estimation techniques, consistently show that closely contested elections are associated with lower levels of income inequality and polarization, suggesting the presence of a larger middle class.
Copyright Date
January 2015
Publication Date
1-1-2015
Keywords
Income inequality
Conference
SERI (Society for Economics Research in India) Conference, July 17-18, 2015, ISB Hyderabad
