Inequality, Collective Action and Redistribution: a New Indicator for Assessing a Complex Relationship

Abstract

The predominant theoretical viewpoint about the problem of income redistribution in capitalist democracies continues to postulate that the pressure towards redistribution is greatest in democracies with more inequality. However, this assumption does not seem to be corroborated empirically; perhaps this is because sometimes inequality only increases between the lower reaches of the distribution of income. In these cases, inequality increases the dispersion of earnings among the stakeholders of redistribution, and this increases their collective action problems. This paper proposes a new theoretical principle for the analysis of the relationship between inequality and redistribution, and develops an indicator consistent to this principle. A preliminary empirical exploration is carried out to illustrate how the proposed indicator is signifi cantly associated with the levels of income redistribution in 19 OECD countries between 1974 and 2005