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More Income Equality or Not? An Empirical Analysis of Individuals' Preferences for Redistribution

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  • María A. García-Valiñas
  • Roberto Fernández Llera
  • Benno Torgler

    ()
    (QUT)

Abstract

Do people prefer a society with an extensive social welfare system with high taxes, or low taxes but lax redistributive policies? Although economists have for a long time investigated the trade-off mechanism between equity and efficiency, surprisingly little information is available about citizens’ preferences over the distribution of income in a society. The aim of this paper is reduce this shortcoming, investigating in an empirical study working with World Values Survey, what shapes individuals' preferences for income equality in Spain. We present evidence that not only traditional economic variables are relevant to be considered, but also factors such as ideology, political interest, fairness perception about others or trust in institutions, are key determinants to understand preferences towards redistribution and equality. Furthermore, we also find that regional conditions affect the citizens’ preferences for income equality. Higher income inequality leads to stronger preferences for equality. On the other hand, there is the tendency that higher social expenditures reduce the preferences for income equality.

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Bibliographic Info

Paper provided by School of Economics and Finance, Queensland University of Technology in its series School of Economics and Finance Discussion Papers and Working Papers Series with number 226.

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Length: 34 Pages
Date of creation: 23 Jan 2008
Date of revision:
Handle: RePEc:qut:dpaper:226

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Keywords: redistribution; inequality; welfare state; social capital; regional conditions;

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References

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  1. Hoxby, Caroline & Baqir, Reza & Alesina, Alberto, 2004. "Political Jurisdictions in Heterogeneous Communities," Scholarly Articles 4552532, Harvard University Department of Economics.
  2. Louis Putterman & John E. Roemer & Joaquim Silvestre, 1998. "Does Egalitarianism Have a Future?," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 861-902, June.
  3. Alberto Alesina & Eliana La Ferrara, 2001. "Preferences for Redistribution in the Land of Opportunities," NBER Working Papers 8267, National Bureau of Economic Research, Inc.
  4. Alberto Alesina & Eliana La Ferrara, 2000. "Participation In Heterogeneous Communities," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 847-904, August.
  5. Clark, Jeremy, 1998. "Fairness preferences and optimization skills: are they substitutes?: An experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 34(4), pages 541-557, March.
  6. Corneo, Giacomo & Grüner, Hans Peter, 2001. "Individual Preferences for Political Redistribution," CEPR Discussion Papers 2694, C.E.P.R. Discussion Papers.
  7. Hans Peter Gruner & Giacomo Corneo, 2000. "Social Limits to Redistribution," American Economic Review, American Economic Association, vol. 90(5), pages 1491-1507, December.
  8. Cutler, David & Vigdor, Jacob & Glaeser, Edward, 1999. "The Rise and Decline of the American Ghetto," Scholarly Articles 2770033, Harvard University Department of Economics.
  9. La Ferrara, Eliana & Alesina, Alberto, 2000. "Participation in Heterogeneous Communities," Scholarly Articles 4551796, Harvard University Department of Economics.
  10. Alberto Alesina & Reza Baqir & William Easterly, 1997. "Public Goods and Ethnic Divisions," NBER Working Papers 6009, National Bureau of Economic Research, Inc.
  11. La Ferrara, Eliana & Alesina, Alberto, 2005. "Preferences for Redistribution in the Land of Opportunities," Scholarly Articles 4552533, Harvard University Department of Economics.
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Cited by:
  1. 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.

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