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Identity and Redistribution

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  • Lindqvist, Erik

    ()
    (Research Institute of Industrial Economics (IFN))

  • Östling, Robert

    ()
    (Institute for International Economic Studies, Stockholm University)

Abstract

This paper models the interaction between individuals' identity choices and redistribution. Both redistributive policies and identity choices are endogenous, and there might be multiple equilibria. The model is applied to ethnicity and social class. In an equilibrium with high taxes, the poor identify as poor and favor high taxes. In an equilibrium with low taxes, at least some of the poor identify with their ethnic group and favor low taxes. The model has two main predictions. First, redistribution is highest when society is ethnically homogenous, but the effect of ethnic diversity on redistribution is not necessarily monotonic. Second, when income inequality is low, an increase in income inequality might induce the poor to identify with their ethnic group and therefore favor lower taxes.

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Bibliographic Info

Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 659.

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Length: 55 pages
Date of creation: 19 Dec 2006
Date of revision: 12 Jun 2007
Publication status: Forthcoming as Lindqvist, Erik and Robert Östling, 'Identity and Redistribution' in Public Choice.
Handle: RePEc:hhs:hastef:0659

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Keywords: Redistribution; social identity; income inequality; ethnic fractionalization; ethnic diversity; social class;

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References

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Citations

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Cited by:
  1. Smith, John, 2009. "Reputation, social identity and social conflict," MPRA Paper 18082, University Library of Munich, Germany.
  2. Ronny Freier & Benny Geys & Joshua Holm, 2013. "Religious Heterogeneity and Fiscal Policy: Evidence from German Reunification," Discussion Papers of DIW Berlin 1266, DIW Berlin, German Institute for Economic Research.
  3. Christina M. Fong & Erzo F.P. Luttmer, 2009. "Do Race and Fairness Matter in Generosity? Evidence from a Nationally Representative Charity Experiment," NBER Working Papers 15064, National Bureau of Economic Research, Inc.
  4. Barnett, Richard & Bhattacharya, Joydeep & Bunzel, Helle, 2012. "Voting for immiserizing income redistribution in the Meltzer-Richard model," School of Economics Working Paper Series, LeBow College of Business, Drexel University 2012-15, LeBow College of Business, Drexel University.
  5. Wagener, Andreas & Kolmar, Martin, 2011. "Group Identities in Conflicts," Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis 48694, Verein für Socialpolitik / German Economic Association.
  6. Lindqvist, Erik & Östling, Robert, 2006. "Identity and Redistribution," Working Paper Series in Economics and Finance, Stockholm School of Economics 659, Stockholm School of Economics, revised 12 Jun 2007.
  7. Pierre Kohler, 2012. "The Effect of Host Society Culture on Migrant Wage Discrimination: Approaching the Roestigraben," IHEID Working Papers, Economics Section, The Graduate Institute of International Studies 08-2012, Economics Section, The Graduate Institute of International Studies.
  8. Kohler, Pierre, 2012. "Three essays on the economic and cultural integration of migrants in Switzerland: putting into perspective the influence of economic discrimination and of host society culture," MPRA Paper 38129, University Library of Munich, Germany.

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