When government’s economic ideology shapes income redistribution. Empirical evidence from the OECD

Abstract

This paper studies the relationship between Government´s economic ideology and income redistribution, using a panel of OECD countries spanning the years 2004–2020. Our results point to the existence of a partisan effect, showing that taxes and transfer policies implemented by parties on the left reduce income inequality more than those of parties on the right. Other political and electoral factors (the proximity of the elections, the number of years for which the chief executive has been in office, and the presence of coalitional and minority governments) do not seem to be as relevant. We also analyze the role that the Great Recession and the globalization process have played in the relationship between Government´s economic ideology and income redistribution, finding that they have significantly altered it.