To%20Redistribute%20or%20Not%3A%20A%20Politician%27s%20Dilemma

Working Papers

To Redistribute or Not: A Politician's Dilemma


CODE: IDB-WP-335
AUTHOR(s): Machado, Fabiana
PUBLISHED: September 2012
LANGUAGE: English
RELATED TOPICS: Finance
DOWNLOAD FILE IN: English

Abstract:

A prerequisite for the adoption of redistributive policies in a democracy is that there be elected representatives who are either committed to or who have an incentive to advocate for such policies. To evaluate the prospects of such an outcome, this pa- per develops a theory exploring two fundamental factors at play during elections – the critical political stage where citizens choose their representatives. The first is the lack of information about the policy inclinations of candidates. The second refers to two motivations compelling candidates into politics (and possibly at odds with each other): the opportunity to implement one’s favored policies or to extract rents. Results indicate the existence of an equilibrium where high inequality and low redistribution can coexist. The theory’s assumptions and outcomes are explored empirically using individual-level data collected in presidential election years in Brazil.

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