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