Religion, Income Inequality, and the Size of the Government
AbstractRecent empirical research has demonstrated that countries with higher levels of religiosity are characterized by greater income inequality. We argue that this is due to the lower level of government services demanded in more religious countries. Religion requires that individuals make financial sacrifices and this leads the religious to prefer making their contributions voluntarily rather than through mandatory means. To the extent that citizen preferences are reflected in policy outcomes, religiosity results in lower taxes, which in turn implies lower levels of spending on both public goods and redistribution. Since measures of income typically do not fully take into account the part of income coming from donations received, this increases measured income inequality. We formalize these ideas in a general equilibrium political economy model and also show that the implications of our model are supported by cross-country data.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 25760.
Date of creation: 17 Sep 2010
Date of revision:
religion; voluntary donations; taxation; redistribution; income inequality;
Other versions of this item:
- Elgin, Ceyhun & Goksel, Turkmen & Gurdal, Mehmet Y. & Orman, Cuneyt, 2013. "Religion, income inequality, and the size of the government," Economic Modelling, Elsevier, vol. 30(C), pages 225-234.
- Ceyhun Elgin & Turkmen Goksel & Mehmet Y. Gurdal & Cuneyt Orman, 2012. "Religion, Income Inequality, and the Size of the Government," Working Papers 1208, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- Ceyhun Elgin & Turkmen Goksel & Mehmet Y. Gurdal, 2010. "Religion, Income Inequality, and the Size of the Government," Working Papers 2010/12, Bogazici University, Department of Economics.
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- Z12 - Other Special Topics - - Cultural Economics - - - Religion
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-23 (All new papers)
- NEP-PBE-2010-10-23 (Public Economics)
- NEP-POL-2010-10-23 (Positive Political Economics)
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