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

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Author Info

  • Sule Akkoyunlu

    ()
    (Socioeconomic Institute, University of Zurich)

  • Ilja Neustadt

    ()
    (Socioeconomic Institute, University of Zurich)

  • Peter Zweifel

    ()
    (Socioeconomic Institute, University of Zurich)

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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File URL: http://www.soi.uzh.ch/research/wp/2008/wp0810.pdf
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Bibliographic Info

Paper provided by Socioeconomic Institute - University of Zurich in its series SOI - Working Papers with number 0810.

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Length: 35 pages
Date of creation: Sep 2008
Date of revision:
Handle: RePEc:soz:wpaper:0810

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Related research

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

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Cited by:
  1. Polk, Andreas & Schmutzler, Armin & Müller, Adrian, 2013. "Lobbying and the Power of Multinational Firms," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79875, Verein für Socialpolitik / German Economic Association.
  2. Michele Sennhauser, 2009. "Why the Linear Utility Function is a Risky Choice in Discrete-Choice Experiments," SOI - Working Papers 1014, Socioeconomic Institute - University of Zurich.

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