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.