Electoral Systems, Partisan Politics, and Income Redistribution: A Critical Quasi-Experiment

Abstract

Iversen and Soskice’s notion that electoral rules affect democracies’ propensity for income redistribution is one of the political economy’s most discussed concepts. Yet, it comes with a number of caveats. Most importantly, it is not clear whether electoral rules indeed affect states’ propensity for redistribution or vice versa and thus whether or not Iversen and Soskice’s findings are spurious. In this article, we focus on the critical case of New Zealand’s electoral reform of the 1990s and offer a comprehensive test of Iversen and Soskice’s concept. We employ the recently developed Bayesian alternative to the synthetic control method and compare the relevant dynamics for New Zealand to those of six majoritarian democracies. Our results largely supports Iversen and Soskice’s claims; due to the lower prevalence of right (center-right) governments, proportional representation democracies tend to redistribute more than majoritarian ones.