Religion, income inequality, and the size of the government
AbstractRecent empirical research has demonstrated that countries with higher levels of religiosity are characterized by greater income inequality. We argue that this is due to the lower level of government services demanded in more religious countries. Religion motivates individuals to engage in charitable giving and this leads them to prefer making their contributions privately and voluntarily rather than through the state. To the extent that citizen preferences are reflected in policy outcomes, religiosity results in lower levels of taxes and hence lower levels of spending on both public goods and redistribution. Since measures of income typically do not fully take into account private transfers received, this increases measured income inequality. We formalize these ideas in a general equilibrium political economy model and also show that the implications of our model are supported by cross-country data.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 30 (2013)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/inca/30411
Religion; Voluntary donations; Taxation; Redistribution; Income inequality;
Other versions of this item:
- Ceyhun Elgin & Turkmen Goksel & Mehmet Y. Gurdal & Cuneyt Orman, 2012. "Religion, Income Inequality, and the Size of the Government," Working Papers 1208, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- Elgin, Ceyhun & Goksel, Turkmen & Gurdal, Mehmet Y & Orman, Cuneyt, 2010. "Religion, Income Inequality, and the Size of the Government," MPRA Paper 25760, University Library of Munich, Germany.
- Ceyhun Elgin & Turkmen Goksel & Mehmet Y. Gurdal, 2010. "Religion, Income Inequality, and the Size of the Government," Working Papers 2010/12, Bogazici University, Department of Economics.
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- Z12 - Other Special Topics - - Cultural Economics - - - Religion
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