Political Polarization and the Size of Government

We study the effect of political polarization on government spending and redistribution using the dispersion of self-reported political preferences as our measure of polarization. Politically polarized countries have lower levels of redistribution and government consumption. The relationship between political polarization and the size of government is stronger in democratic countries, indicating that the effect goes through the political system. The results are robust to a large set of control variables, including GDP per capita and income inequality.

 Supplementary Appendix 2009-08-18.xls