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Is the Welfare State Sustainable? Experimental Evidence on Citizens' Preferences for Redistribution

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  • Neustadt, Ilja
  • Zweifel, Peter

Abstract

The sustainability of the welfare state ultimately depends on citizens' preferences for income redistribution. They are elicited through a Discrete Choice Experiment performed in 2008 in Switzerland. Attributes are redistribution as GDP share, its uses (the unemployed, old-age pensioners, people with ill health etc.), and nationality of beneficiary. Estimated marginal willingness to pay (WTP) is positive among those who deem benefits too low, and negative otherwise. However, even those who state that government should reduce income inequality exhibit a negative WTP on average. The major finding is that estimated average WTP is maximum at 21% of GDP, clearly below the current value of 25%. Thus, the present Swiss welfare state does not appear sustainable.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 22233.

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Date of creation: 28 Feb 2010
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Handle: RePEc:pra:mprapa:22233

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Keywords: Income redistribution; welfare state; sustainability; preferences; willingness to pay; discrete choice experiments;

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Cited by:
  1. Elsayyad, May & Konrad, Kai A., 2012. "Fighting Multiple Tax Havens," Munich Reprints in Economics, University of Munich, Department of Economics 13964, University of Munich, Department of Economics.
  2. Neustadt, Ilja & Zweifel, Peter, 2011. "Income redistribution: how to divide the pie?," MPRA Paper 35427, University Library of Munich, Germany.
  3. Pfarr, Christian & Ulrich, Volker, 2011. "Discrete-Choice-Experimente zur Ermittlung der Präferenzen für Umverteilung
    [Discrete-Choice-Experiments to elicit individuals' preferences for redistribution]
    ," MPRA Paper 31707, University Library of Munich, Germany.
  4. Musharraf Cyan & Jorge Martinez-Vazquez & VIoleta Vulovic, 2013. "Measuring tax effort: Does the estimation approach matter and should effort be linked to expenditure goals?," International Center for Public Policy Working Paper Series, at AYSPS, GSU, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University paper1308, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

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