This paper surveys the rise of income inequality in affluent nations. Social programs are critical to keeping inequality in check, but their sustainability is increasingly threatened. A possible solution is high levels of employment.
According to the ‘median-voter’ hypothesis, greater inequality in the market distribution of earnings or income tends to produce greater generosity in redistributive policy. We outline the steps in the causal chain specified by the hypothesis and attempt to assess these steps empirically. Prior studies focusing on cross-country variation have found little support for the median-voter model. We examine ...