Goodbye to Meltzer-Richard: Testing major theories of redistribution

We re-analyse four major explanations of redistribution including the Meltzer-Richard model, power resources theory, Iversen-Soskice’s political institutions explanation, and Lupu and Ponstusson’s skewness theory. For each of these, we reconsider the causal chain and test their assumptions using a comprehensive, original dataset on working-age income-inequality consisting of 589 country-years for affluent democracies in the period 1963–2019. We find that partisan governments are directly related to redistribution and have a strong effect on the generosity of social policy. Lupu and Pontusson’s skew measure has no effect on redistribution in models with controls but does have a positive effect on generosity of social policy. Finally, we find that the mean-to-median income ratio has a consistent, negative, and highly significant effect on redistribution, directly refuting the very premise of the Meltzer-Richard model.