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Inequality Growth and Economic Policy Liberalism: An Updated Test of a Classic Theory

Long-standing political economy theory argues that increases in economic inequality will increase public demand for liberal economic policy. Empirical support for this proposition is relatively inconsistent, though, with the result being uncertainty about the validity of the theory. Since the inception of such theory, however, scholarship has rendered new insights about how to conceptualize the most theoretically plausible measure of exposure to inequality. In contrast to prior work, which largely focuses on citizens’ responses to what may now be viewed as an implausible measure, national-level inequality, this article focuses on what this literature suggests to be a more plausible measure: inequality growth in citizens’ local context. Using national panel data, this article offers a theoretically updated and more rigorous test of the redistributive democracy hypothesis. The results demonstrate that drastic increases in local income inequality are associated with increasing support for liberal economic policy.