Excludes market instruments
Daniel Y. Kono & Greg Love 7, Kono is an Assistant Professor of Political Science at the University of California, Davis; Love is a Ph.D. Candidate in Political Science at the University of California, Davis, “Who Rides the Storm? Political Institutions and Trade Adjustment,” Business and Politics, vol. 9, no. 1, 04/2007, pp. 1–26
It is important to emphasize that the mechanism underlying our hypothesis is market adjustment, not fiscal redistribution. Although, in PRT’s model, the separation of powers also affects redistribution, it is not clear whether these redistributive effects should raise or lower inequality. If the minority that benefits from redistribution is poor, then separation of powers, which reduces redistributive transfers, will increase inequality. However, if this minority is wealthy, then separation of powers and the resulting fall in transfers will reduce inequality. Because we do not know who the transfer beneficiaries are, the impact of separation of powers on inequality via transfer spending is theoretically ambiguous. We thus concentrate on the public-good implications of PRT’s model. For this reason, our empirical analysis examines the relationship between budgetary institutions and pre-tax-and-transfer incomes. Because such incomes do not incorporate fiscal transfers, any relationship between institutions and incomes is likely to reflect the former’s public-good rather than redistributional effects.