Socio-Economic Review Advance Access originally published online on March 1, 2006
Socio-Economic Review 2007 5(1):117-148; doi:10.1093/ser/mwl002
Inequality and the demand for redistribution: are the assumptions of the new growth theory valid?1
International Labour Office, Geneva, Switzerland
* Correspondence: Malte Lübker, International Labour Office, 4 route des Morillons, 1211 Geneva 22, Switzerland. E-mail: luebker{at}ilo.org
One prominent strand of the new growth theory has identified the political process as a potential channel to link high inequality to lower long-term growth. Several authors have argued that (i) higher inequality causes higher demand for redistribution, (ii) which leads to greater redistribution and higher taxes, and (iii) which is in turn harmful to growth. This article addresses the first step of this argument, a proposition that has been widely accepted as a stylized fact. Using cross section data for 26 countries from the ISSP's module on Social Inequality, it presents an empirical test that yields no support for the idea that public support for redistribution rises with inequality across countries. This finding is attributed to the influence of social justice norms that vary greatly between groups of culturally similar countries.
Key Words: income distribution • redistribution • new growth theory • rational choice • political sociology • JEL classification: D31 personal income and wealth distribution, D63 welfare economics, equity, justice, inequality, H24 personal income and other non-business taxes and subsidies, O15 economic development, human resources, income, distribution, migration