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Information, Social Mobility and the Demand for Redistribution

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  • Francesco Feri

Abstract

This paper studies how heterogeneity in income dynamics affects the POUM hypothesis (the idea that poor people do not support high level of redistribution because they hope to be rich in the future). We consider a setting where individuals evaluate their expected future income using both their current income and observable characteristics such as education, race or gender. We find that the POUM effect could increase or decrease the support for redistribution depending on the parameters of the model. Moreover we find that the POUM effect is independent of a particular shape (the concavity) of the resulting aggregate income transition function. Finally, using data from Italy, we test the model and perform a first empirical estimation of the POUM effect in Italy.

Suggested Citation

  • Francesco Feri, 2008. "Information, Social Mobility and the Demand for Redistribution," Working Papers 2008-02, Faculty of Economics and Statistics, Universität Innsbruck.
    • Handle: RePEc:inn:wpaper:2008-02
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    References listed on IDEAS

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    1. Roland Benabou & Efe A. Ok, 2001. "Social Mobility and the Demand for Redistribution: The Poum Hypothesis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 447-487.
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    3. Roland Benabou & Efe A. Ok, 2000. "Mobility as Progressivity: Ranking Income Processes According to Equality of Opportunity," Working Papers 150, Princeton University, School of Public and International Affairs, Discussion Papers in Economics.
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    7. 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.
    8. Thomas Piketty, 1995. "Social Mobility and Redistributive Politics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 551-584.
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    11. Dardanoni Valentino, 1993. "Measuring Social Mobility," Journal of Economic Theory, Elsevier, vol. 61(2), pages 372-394, December.
    12. Mark B. Stewart & Joanna K. Swaffield, 1999. "Low Pay Dynamics and Transition Probabilities," Economica, London School of Economics and Political Science, vol. 66(261), pages 23-42, February.
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    Cited by:

    1. Jesús Crespo-Cuaresma & Andreas Breitenfellner, "undated". "Crude Oil Prices and the Euro-Dollar Exchange Rate: A Forecasting Exercise," Working Papers 2008-08, Faculty of Economics and Statistics, Universität Innsbruck.

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    More about this item

    Keywords

    Social Mobility; Income Distribution; Political Economy; Inequality; Taxation;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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