POLITICAL POLARIZATION, INCOME INEQUALITY AND SIZE OF GOVERNMENT

This paper empirically investigates the determinants of political polarization. Size of government and income distribution are the main independent variables along with other controlling variables. The statistical analysis uses panel data econometric. The sample of countries includes 57 countries and time period spans between 1990 and 2015. Results of regressions analysis indicates that increased income inequality increases political polarization. Political polarization is derived from World Values Survey (WVS). It is measured as standard deviation of responses to the question what is role for government. In addition, results of our empirical indicates that increased government size reduces the political polarization. The paper explains the links for these findings. It concludes with some policy implications.