Median Voter and Power Resources Revisited: A Composite Model of Inequality
37 Pages Posted: 15 Nov 2013
Date Written: November 15, 2013
Abstract
This paper explains redistribution and income inequality by revisiting traditional approaches. Despite the popularity of two dominant theories, the median voter hypothesis (the Meltzer-Richard model) and power resources theory, they are thought to have contrasting predictions and have seldom been incorporated under a single framework. I develop a composite model of inequality by accommodating their core arguments. This study also analyzes stages of inequality formation, such as market wage inequality and redistribution, and adds in a dynamic component to the model, completing the cycle of income distribution. The model is supported empirically with data from 18 OECD countries from 1970 to 2006. I demonstrate the joint relevance and significance of the two theories, showing that they are not necessarily mutually exclusive and should be properly addressed from both theoretical perspectives.
Keywords: inequality, redistribution, median voter theory, power resources theory
JEL Classification: H53, I30
Suggested Citation: Suggested Citation