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Why does the amount of income redistribution differ between the United States and Europe? The Janus face of Switzerland

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Author Info

  • Sule Akkoyunlu

    ()
    (KOF Swiss Economic Institute, ETH Zurich, Switzerland)

  • Ilja Neustadt

    ()
    (University of Zürich, Socioeconomic Institute, Zürich)

  • Peter Zweifel

    ()
    (University of Zürich, Socioeconomic Institute, Zürich)

Abstract

In this paper, the amount of income redistribution in the United States, the European Union, and Switzerland is compared and empirically related to economic, political, and behavioral determinants elaborated in the literature. Lying in between the two poles, Switzerland provides unique evidence about the relative merits of competing hypotheses. It tips the balance against the economic explanation, which predicts more rather than less income redistribution in the United States compared to the EU. It only weakly supports the political model linking proportional representation and multiparty structure (which also characterize Switzerland) to redistribution; yet the Swiss share of transfers in the GDP is low. Behavioral explanations receive a good deal of support from the case of Switzerland, a country that shares with the United States the belief that hard work rather than luck, birth, connections, and corruption determine wealth. In this way, the Janus face of Switzerland may help to explain the difference in the amount of U.S. and EU income redistribution.

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Bibliographic Info

Paper provided by KOF Swiss Economic Institute, ETH Zurich in its series KOF Working papers with number 09-228.

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Length: 37 pages
Date of creation: May 2009
Date of revision:
Handle: RePEc:kof:wpskof:09-228

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Related research

Keywords: Redistribution; Income Mobility; Openness; Political Economy; Beliefs; Religion; Immigration;

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Cited by:
  1. Neustadt, Ilja & Zweifel, Peter, 2011. "Income redistribution: how to divide the pie?," MPRA Paper 35427, University Library of Munich, Germany.

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