The Welfare States: The Meltzer-Richard Model

1. Introduction
The welfare state is one of the cornerstones of modern day life in most western countries. This fact has prompted a relative extensive literature and research field on how welfare states acts and evolves. One of the more prominent topics of this research agenda, has been why some countries redistribute more than others, a conclusive answer is yet to be found but most of the work on the subject starts with the premise of the Meltzer-Richard(1981) model, which entails that the democratic institutions empower the lower classes whom stand to benefit most from more redistribution. This results in what is called the median voter theorem, which states that given a typical right-skewed distribution of income, the median voter will seek redistribution to the point where the costs outweigh the benefits.

Following the logic above, it should expected that the countries with the less inequality also redistribute less, but this is clearly not the case, in fact the opposite seems to be true (Moene and Wallerstein, 2001). It would seem that the theoretical foundation of the Meltzer-Richard model is too limited in contemporary welfare societies. It gives no explanation to how or when government coalitions between the different parties stabilize and when they