Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 02/2006: Do the rich vote Conservative because they are rich?

Jo Thori Lind (j.t.lind@econ.uio.no)
Additional contact information
Jo Thori Lind: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway

Abstract: Political economy models predict that the rich oppose redistribution, and hence vote for conservative parties. Although this seems to fit the data well, I show that this is not true when we control for unobservable characteristics. Using Norwegian survey data, I study to what extent voting is caused by income. Unobserved characteristics correlated with income are handled by using fixed effects panel data discrete choice models. Although a positive association between income and conservative voting persists when controlling for unobservables, the magnitude of the effect is reduced by a factor of five. To correct for measurement error, I instrument income with average income by profession. The magnitude of the coefficients is increased, but the main conclusions remain.

Keywords: Political economy; redistribution; voting; multinomial logit; panel data

JEL-codes: C23; C25; D31; D72; H11; H53

46 pages, February 3, 2006

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