RACISM, XENOPHOBIA, AND REDISTRIBUTION

We model political competition as a contest between parties that represent constituents, and which announce policies in a two‐dimensional policy space; the first dimension concerns the degree of redistribution, and the second, the race or immigration issue. Given the distribution of voter preferences on this space, a political equilibrium is determined. We study the effect that racist or anti‐immigrant preferences in the polity have on equilibrium values of the redistributive policy. For the United States, there is a substantial reduction in distribution below what it counterfactually would have been, absent racism. For the UK, France, and Denmark, there are effects of the same sign, but with different magnitudes. (JEL: D70, D72, D30)