Effect of Income Inequality on Party Position in OECD Countries

Abstract

The canonical median voter models, such as the Melzer Richard model, expect political parties to take on more progressive stances with an increase in inequality, which should be associated with the median voter of a given society preferring more progressive policy measures. By conducting mediation analyses with a sequential g-estimator on OECD data, this paper finds evidence that suggests otherwise. Specifically, both leftist and rightist parties in OECD countries are found to take on more conservative policy stances through the median voter mechanism when income inequality increases. On the other hand, the results of the analyses show that through other causal pathways, an increase in inequality induces both parties to turn more progressive.