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Examining the Robin Hood Paradox - A cross-country panel data study on the impact of wealth and income inequality on redistribution policies

Losjö Dahlström, Alexander LU and Nystedt, Ludvig (2025) NEKN01 20251
Department of Economics
Abstract (Swedish)
This paper investigates the impact income and wealth inequality have on redistribution through economic policy. The question is unresolved in the current literature. Addressing a key research gap, we analyze both income and wealth inequality as potential drivers of redistribution. Using a cross-country panel data study of 24 countries in the OECD, we estimate two different econometric models through which we investigate this relationship. The results mainly show a non-existent impact from inequality on redistribution, with some signs of a small negative impact from income inequality on redistribution. This contradicts classic theoretical models using the median voter theorem, but partly supports previous empirical research. Importantly for... (More)
This paper investigates the impact income and wealth inequality have on redistribution through economic policy. The question is unresolved in the current literature. Addressing a key research gap, we analyze both income and wealth inequality as potential drivers of redistribution. Using a cross-country panel data study of 24 countries in the OECD, we estimate two different econometric models through which we investigate this relationship. The results mainly show a non-existent impact from inequality on redistribution, with some signs of a small negative impact from income inequality on redistribution. This contradicts classic theoretical models using the median voter theorem, but partly supports previous empirical research. Importantly for policymakers, the findings confirms the so-called Robin Hood paradox, but challenges several possible explanations found in the current literature. Further research is needed to definitively determine the impact of inequality on redistribution and the possible conclusive causes for the Robin Hood paradox. (Less)
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author
Losjö Dahlström, Alexander LU and Nystedt, Ludvig
supervisor
organization
course
NEKN01 20251
year
type
H1 - Master's Degree (One Year)
subject
keywords
income inequality, wealth inequality, redistribution, panel data, median voter hypothesis, Robin Hood paradox
language
English
id
9204068
date added to LUP
2025-09-12 10:00:06
date last changed
2025-09-12 10:00:06
@misc{9204068,
  abstract     = {{This paper investigates the impact income and wealth inequality have on redistribution through economic policy. The question is unresolved in the current literature. Addressing a key research gap, we analyze both income and wealth inequality as potential drivers of redistribution. Using a cross-country panel data study of 24 countries in the OECD, we estimate two different econometric models through which we investigate this relationship. The results mainly show a non-existent impact from inequality on redistribution, with some signs of a small negative impact from income inequality on redistribution. This contradicts classic theoretical models using the median voter theorem, but partly supports previous empirical research. Importantly for policymakers, the findings confirms the so-called Robin Hood paradox, but challenges several possible explanations found in the current literature. Further research is needed to definitively determine the impact of inequality on redistribution and the possible conclusive causes for the Robin Hood paradox.}},
  author       = {{Losjö Dahlström, Alexander and Nystedt, Ludvig}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Examining the Robin Hood Paradox - A cross-country panel data study on the impact of wealth and income inequality on redistribution policies}},
  year         = {{2025}},
}