Political Representation and Legislative Bargaining over Redistribution

The theories of dynamic legislative bargaining have supposed that the distribution of legislators are constant across periods. In reality, a transition in the economic condition makes people change the candidate they vote for and politicians alter their opinions. Regarding the redistribution and inequality issue, a redistribution policy affects the future legislators’ policy preferences via influencing the economic inequality among the people. This paper recognizes such a feedback effect and investigates its effect on the outcomes in the legislature. This finding suggests that a high political representation causes a high capital accumulation associated with a low expected tax rate. Socially efficient allocation can be reached only if the political representation is perfect.