Insurance and representation: Why do some democracies redistribute more than others?

We provide an political-institutional explanation for the enormous variance in the extent to which democratic governments redistributes income from rich to poor. In addition to the number of veto points, which has been emphasized in the existing literature, we show the importance of the skill system and of the electoral system. The nature of skills is important because it determines the demand for insurance, which leads to an ex post reduction in inequality, while the electoral system is important because it shapes the class-party alliances that are likely to form when there are more than two parties and policies are multi-dimensional. We test our argument on panel data for poverty reduction in 14 OECD countries. Prepared for presentation at the 2002 Annual Meetings of the American Political Science Association, Sheraton and Marriott Hotels, Boston, August 29 September 2, 2002.