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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 Barcelona Graduate School of Economics in its series Working Papers with number 434.

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Date of creation: Feb 2010
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Handle: RePEc:bge:wpaper:434

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Keywords: Social Contract; Endogenous Sentiments; Voting over Taxes; Moral Work Values;

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References

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Cited by:
  1. Robin Boadway & Nicolas-Guillaume Martineau, 2013. "Normative Analysis with Societal Constraints," CESifo Working Paper Series 4305, CESifo Group Munich.
  2. Corneo, Giacomo, 2013. "Work norms, social insurance and the allocation of talent," Discussion Papers 2013/12, Free University Berlin, School of Business & Economics.
  3. SCHOKKAERT, Erik & TRUYTS, Tom, 2014. "Preferences for redistribution and social structure," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2014001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A preference-Based Lucas Critique of Public Policy," UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics 2009-11, University of Massachusetts Amherst, Department of Economics.
  5. Samuel Bowles & Sandra Polania-Reyes, 2011. "Economic incentives and social preferences: substitutes or complements?," Department of Economics University of Siena, Department of Economics, University of Siena 617, Department of Economics, University of Siena.
  6. Corneo, Giacomo, 2013. "Work Norms, Social Insurance and the Allocation of Talent," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University 405, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  7. Matteo Cervellati & Paolo Vanin, 2010. "”Thou shalt not covet ...”: Prohibitions, Temptation and Moral Values," Working Papers, Fondazione Eni Enrico Mattei 2010.54, Fondazione Eni Enrico Mattei.
  8. 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.
  9. Giacomo Corneo, 2011. "GINI DP 17: Income Inequality, Value Systems and Macroeconomic Performance," GINI Discussion Papers, AIAS, Amsterdam Institute for Advanced Labour Studies 17, AIAS, Amsterdam Institute for Advanced Labour Studies.
  10. Corneo, Giacomo, 2013. "Work norms, social insurance and the allocation of talent," Journal of Public Economics, Elsevier, Elsevier, vol. 107(C), pages 79-92.
  11. repec:aia:ginidp:dp17 is not listed on IDEAS

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