Electoral Systems, Partisan Politics, and Income Redistribution: A Critical Quasi-Experiment
Published date | 01 December 2023 |
DOI | http://doi.org/10.1177/00104140231169018 |
Author | Maciej A. Górecki,Michał Pierzgalski |
Date | 01 December 2023 |
Subject Matter | Articles |
Article
Comparative Political Studies
2023, Vol. 56(14) 2165–2200
© The Author(s) 2023
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DOI: 10.1177/00104140231169018
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Electoral Systems,
Partisan Politics, and
Income Redistribution: A
Critical
Quasi-Experiment
Maciej A. Górecki
1
and MichałPierzgalski
2
Abstract
Iversen and Soskice’s notion that electoral rules affect democracies’pro-
pensity 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 dy-
namics for New Zealand to those of six majoritarian democracies. Our results
largely support 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.
Keywords
income redistribution, electoral systems, causal inference, electoral reform,
New Zealand
1
University of Lodz, Poland
2
University of Warsaw, Poland
Corresponding Author:
MichałPierzgalski, Faculty of International and Political Studies, University of Lodz, Skladowa 43,
Lodz 90-127, Poland.
Email: pierzgal@gmail.com
Introduction
Building on previous work on the economic consequences of electoral
systems (e.g., Austen-Smith, 2000;Rogowski & Kayser, 2002), Iversen and
Soskice (2006) argue that the degree to which democracies pursue income
redistribution depends on the electoral rules by means of which they elect their
respective parliaments; proportional representation (PR) democracies tend to
engage in redistribution on a larger scale than do the broadly conceived
majoritarian ones. Iversen and Soskice’s correlational analysis of the re-
duction of inequality in the period between the late 1960s and the late 1990s
largely corroborates their hypothesis. Nonetheless, in the years following the
publication of their seminal work, a number of studies have effectively
challenged their concept at either the conceptual or the empirical level. In
particular, the aforementioned authors themselves have proposed a theory of
the origins of electoral systems (Cusack et al., 2007) that raises legitimate
concerns as to whether or not the observed relationship between electoral
systems and redistribution is endogenous and spurious.
In this article, we embark on a comprehensive and rigorous reexamination
of Iversen and Soskice’s (2006) theory. Our goals are threefold. First, we
reconstruct Iversen and Soskice’s (2006) reasoning about the effect of
electoral institutions on income redistribution. The entire causal mechanism
runs from the greater fragmentation of party systems under PR rules
(Duverger, 1959), through the lower prevalence of right-wing (center-right)
governments in the more fragmented party systems, to the greater degree of
redistribution in countries where the Right holds power less often. Second, we
refer to the challenges faced by their concept, be it at the conceptual or the
empirical level, to outline the major concerns that have thus far arisen with
respect to it. Finally, we focus on the critical case of the electoral reform
undergone in the 1990s by New Zealand, involving a replacement of the
single-member plurality (SMP) system with an effectively proportional one.
In order to maximize the validity of the causal conclusions which we draw and
overcome the perils resulting from the small number of cases at hand, we
employ the recently developed dynamic multilevel latent factor model (Pang
et al., 2021), a Bayesian alternative to synthetic control algorithms, and
compare the relevant political and economic dynamics in New Zealand to
those for the control group. The latter comprises six majoritarian democracies
(Australia, Canada, France, Japan, the United Kingdom, and the United
States). Our results suggest that Iversen and Soskice’s (2006) concept holds at
all the crucial levels, from the impact of the electoral system on the shape of
the party system, through its effect on partisan politics, to its influence on
income redistribution. At the same time, we find virtually no evidence
supporting alternative explanations to the observed higher levels of
2166 Comparative Political Studies 56(14)
redistribution under PR, emphasizing either the opportunistic behavior of
political elites (Persson et al., 2007) or voter mobilization (Paulsen, 2022).
The article proceeds as follows. The next section outlines Iversen and
Soskice’s (2006) reasoning. The third section refers to the major caveats that
their concept appears to come with. The fourth section justifies the selection of
New Zealand’s electoral reform of the 1990s as an ideal and critical case from
which to draw causal inferences about the effects of electoral rules on income
redistribution. The fifth section touches upon the broadly conceived meth-
odological aspects of our study. The sixth section presents and discusses the
results that we obtain. The seventh section focuses on concepts alternative to
that of Iversen and Soskice. The eighth section is devoted to robustness
checks. The last section concludes the article.
Electoral Institutions, Partisan Politics, and Income
Redistribution: The Concept
Iversen and Soskice (2006; for similar reasoning, see Ticchi & Vindigni,
2010) point to the politics of coalitions as a factor that shapes the relationship
between electoral institutions and democracies’tendency for income redis-
tribution. Their reasoning is essentially founded on Duverger’s (1959) laws, a
fundamental concept linking electoral rules to the levels of party system
fragmentation. Briefly speaking, majoritarian rules, favoring a two-party
system (Duverger, 1959), shall result in a competition between two broad
policy platforms (parties): center-left and center-right. In such a situation, the
median (middle-income) voter shall tend to prefer the latter platform. This is
because the former poses a risk of severe income losses in the event the party
deviates from the center-left economic position and embarks on a purely leftist
agenda. An analogous deviation of the party presenting itself as center-right to
a rightmost position is not as uncomfortable to the median voter because
potential losses incurred due to transfer cuts are to an extent compensated by
lower tax (Iversen & Soskice, 2006: 169). Thus, majoritarian democracies
shall see a relatively high prevalence of center-right governments and, as a
result, also limited redistribution efforts.
Unlike majoritarian systems, PR favors multipartyism (Duverger, 1959),
with middle-income voters having the opportunity to vote for an autonomous,
economically centrist party. The autonomous status of the political Center is
crucial because, under relatively high parliamentary fragmentation, such
groupings oftentimes become indispensable government coalition partners for
both the Right and the Left. In this context, allying with the representatives of
the low-income groups, the Left, and sharing the benefits from high taxes
imposed on the high-income group shall be an arguably attractive strategy
from the viewpoint of that (centrist) party and its respective electorate. Center-
left governments shall thus be more prevalent under PR rules than under
Górecki and Pierzgalski 2167
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