Dictatorships (actually) redistribute more

This paper seeks to examine the effect of political regimes on actual fiscal redistribution. We first use a simplified theoretical framework which allows us to formalize the testable implications of the relevant literature. Subsequently, employing data on Gini coefficients before and after taxes and transfers we develop a measure of fiscal redistribution which allows us to capture the targeting of government transfers. Then, our empirical analysis examines the impact of the political regime on realized fiscal redistribution for a panel of 133 developed and developing countries between 1960 and 2010. Our results suggest that dictatorial regimes redistribute more than democracies through fiscal policies. Moreover, our analysis suggests that the positive impact of the dictatorial regime on fiscal redistribution is mitigating after some years of regime’s stability and finally becomes negative. Our empirical findings remain robust across several different specifications and estimation techniques.