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Work Values, Endogenous Sentiments and Redistribution

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  • Matteo Cervellati

    ()

  • Joan Esteban

    ()

  • Laurence Kranich

    ()

Abstract

We examine the interactions between individual behavior, sentiments and the social contract in a model of rational voting over redistribution. Agents have moral "work values". Individuals' self-esteem and social consideration of others are endogenously determined comparing behaviors to moral standards. Attitudes toward redistribution depend on self-interest and social preferences. We characterize the politico-economic equilibria in which sentiments, labor supply and redistribution are determined simultaneously. The equilibria feature different degrees of "social cohesion" and redistribution depending on pre-tax income inequality. In clustered equilibria the poor are held partly responsible for their low income since they work less than the moral standard and hence redistribution is low. The paper proposes a novel explanation for the emergence of different sentiments and social contracts across countries. The predictions appear broadly in line with well-documented differences between the United States and Europe.

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Bibliographic Info

Paper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 815.10.

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Length: 43
Date of creation: 25 Mar 2010
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Handle: RePEc:aub:autbar:815.10

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Keywords: Social Contract; Endogenous Sentiments; Voting over Taxes; Moral Work Values; Redistribution; Income Inequality; Politico-Economic Equilibria.;

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Citations

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Cited by:
  1. Cervellati, Matteo & Vanin, Paolo, 2013. ""Thou Shalt Not Covet ...": Prohibitions, Temptation and Moral Values," IZA Discussion Papers 7334, Institute for the Study of Labor (IZA).
  2. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A preference-Based Lucas Critique of Public Policy," UMASS Amherst Economics Working Papers 2009-11, University of Massachusetts Amherst, Department of Economics.
  3. repec:aia:ginidp:dp17 is not listed on IDEAS
  4. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A Preference-based Lucas Critique of Public Policy," CESifo Working Paper Series 2734, CESifo Group Munich.
  5. Giacomo Corneo, 2011. "GINI DP 17: Income Inequality, Value Systems and Macroeconomic Performance," GINI Discussion Papers 17, AIAS, Amsterdam Institute for Advanced Labour Studies.
  6. Samuel Bowles & Sandra Polania-Reyes, 2011. "Economic incentives and social preferences: substitutes or complements?," Department of Economics University of Siena 617, Department of Economics, University of Siena.

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