Income Inequality and Elections’ Financing: New Evidence from Brazil and Japan

Felipe Roviello

Maurício S. Bugarin

Theoretical political economy models suggest that political parties representing different income groups tend to support different public policies in more heterogeneous societies. Consequently, lobbyists demonstrate a greater propensity to contribute to political campaigns to mitigate the potential implementation of unfavourable policies should the opposing party prevail. Therefore, contributions to electoral campaigns tend to increase with income inequality. This study investigates the influence of income inequality on election expenditures in Brazil and Japan, two nations that exhibit stark differences in terms of income disparity, using panel data from the Brazilian local elections from 2002 to 2016 and from the Japanese House of Councillor’s prefectural-tier elections from 1977 to 2016. Furthermore, it explores inequality spillover effects on campaign donations in Brazil and inequality effects on different types of electoral expenditures in Japan. All results suggest that more unequal societies tend to have more expensive elections.

Keywords: Campaign Financing; Income Inequality; Elections; Brazil; Japan. JEL Codes: D31; D72

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