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Identity and Redistribution

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Author Info
Lindqvist, Erik () (Research Institute of Industrial Economics (IFN))

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Abstract

This paper models the interaction between individuals' identity choices and redistribution. Both redistributive polices 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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Publisher Info
Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 735.

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Length: 33 pages
Date of creation: 17 Mar 2008
Date of revision:
Handle: RePEc:hhs:iuiwop:0735

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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
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Related research
Keywords: Redistribution; Social Identity; Income Inequality; Ethnic Fractionalization; Ethnic Diversity; Social Class;

Other versions of this item:

Find related papers by JEL classification:
H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities and Races; Non-labor Discrimination

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Alberto Alesina & George-Marios Angeletos, 2004. "Fairness and Redistribution," Levine's Bibliography 122247000000000283, UCLA Department of Economics. [Downloadable!]
    Other versions:
  2. David Austen-Smith & Michael Wallerstein, 2003. "Redistribution in a Divided Society," Discussion Papers 1362, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  3. Giacomo Corneo & Hans Peter Gruner, 2000. "Social Limits to Redistribution," American Economic Review, American Economic Association, vol. 90(5), pages 1491-1507, December. [Downloadable!] (restricted)
  4. Erzo F. P. Luttmer, 2001. "Group Loyalty and the Taste for Redistribution," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 500-528, June. [Downloadable!] (restricted)
    Other versions:
  5. Alberto Alesina & Eliana La Ferrara, 2005. "Ethnic Diversity and Economic Performance," Journal of Economic Literature, American Economic Association, vol. 43(3), pages 762-800, September. [Downloadable!] (restricted)
    Other versions:
  6. Orr, Larry L, 1976. "Income Transfers as a Public Good: An Application to AFDC," American Economic Review, American Economic Association, vol. 66(3), pages 359-71, June. [Downloadable!] (restricted)
  7. Piketty, Thomas, 1995. "Social Mobility and Redistributive Politics," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 551-84, August. [Downloadable!] (restricted)
    Other versions:
  8. Roland G. Fryer, Jr. & Paul Torelli, 2005. "An Empirical Analysis of 'Acting White'," NBER Working Papers 11334, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Jo Thori Lind, 2003. "Fractionalization and the Size of Government," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  10. Oguzhan C. Dincer & Peter J. Lambert, 2006. "Taking care of your own: Ethnic and religious heterogeneity and income inequality," University of Oregon Economics Department Working Papers 2006-9, University of Oregon Economics Department. [Downloadable!]
  11. Lindqvist, Erik & Östling, Robert, 2006. "Identity and Redistribution," Working Paper Series in Economics and Finance 659, Stockholm School of Economics, revised 12 Jun 2007. [Downloadable!]
    Other versions:
  12. Alberto Alesina & Edward Glaeser & Bruce Sacerdote, 2001. "Why Doesn't the United States Have a European-Style Welfare State?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2001-2), pages 187-278. [Downloadable!]
  13. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October. [Downloadable!] (restricted)
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  15. Roemer, John E., 1998. "Why the poor do not expropriate the rich: an old argument in new garb," Journal of Public Economics, Elsevier, vol. 70(3), pages 399-424, December. [Downloadable!] (restricted)
  16. Oguzhan C. Dincer & Peter J. Lambert, 2006. "Taking care of your own: Ethnic and religious heterogeneity and income inequality," Working Papers 48, ECINEQ, Society for the Study of Economic Inequality. [Downloadable!]
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    Other versions:
  19. Klor, Esteban F & Shayo, Moses, 2007. "Social Identity and Preferences over Redistribution," CEPR Discussion Papers 6406, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  20. James Habyarimana & Macartan Humphreys & Daniel N. Posner & Jeremy Weinstein, 2006. "Why Does Ethnic Diversity Undermine Public Goods Provision? An Experimental Approach," IZA Discussion Papers 2272, Institute for the Study of Labor (IZA). [Downloadable!]
  21. Kenneth F. Scheve & Matthew J. Slaughter, 2001. "Labor Market Competition And Individual Preferences Over Immigration Policy," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 133-145, February. [Downloadable!] (restricted)
  22. Alesina, Alberto & Baqir, Reza & Easterly, William, 1999. "Public goods and ethnic divisions," Policy Research Working Paper Series 2108, The World Bank. [Downloadable!]
    Other versions:
  23. Perotti, Roberto, 1996. " Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-87, June.
  24. Alesina, Alberto & La Ferrara, Eliana, 2005. "Preferences for redistribution in the land of opportunities," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 897-931, June. [Downloadable!] (restricted)
    Other versions:
  25. Jo Thori Lind, 2005. "Why is there so little redistribution?," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 31, pages 111-125. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Lindqvist, Erik, 2008. "Identity and Redistribution," Working Paper Series 735, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
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