Coercive Redistribution and the Franchise: A Preliminary Investigation Using Computable General Equilibrium Modelling
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In this paper we use a computable general equilibrium model of a competitive political economy, applied to data for the United Kingdom about 1870, to explore the relationship between the franchise and coercive redistribution in representative democracies. The counterfactual experiments presented suggest that a simple general equilibrium story, which has often been told, may in fact explain why the dramatic increase in male suffrage that occurred in the second half of the nineteenth century did not lead to much greater redistribution from rich owners of capital to the poor. The simulations indicate that as high capital incomes are taxed, the adverse equilibrium consequences of reduced capital accumulation lead even the poor who benefit substantially from public expenditures to support greater reliance on the taxation of labour incomes.
Methodologically, the paper illustrates how a computable general equilibrium model incorporating expected vote maximizing political parties and an endogenous fiscal system can be constructed and calibrated. Given the highly aggregated structure of the model and the nature of the data employed, the most important contribution of the paper may be the guidance it offers to those who wish to pursue further the general equilibrium consequences of the franchise.
KeywordsPublic Choice Labour Income Computable General Equilibrium Model Social Account Matrix Political Equilibrium
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