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Does income inequality increase charitable giving?

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  • A. Abigail Payne
  • Justin Smith

Abstract

Do households react to changes in the distribution of income in their localities by changing their charitable giving? The theoretical prediction of the effects of income inequality on giving is unclear. We study how changes in income inequality measured at the neighbourhood and municipality levels affect charitable giving by households in Canada between 1991 and 2006. We find that increases in inequality increase giving. Results are sensitive to the geographic dispersion of low- and high-income households in neighbourhoods within a municipality. The effect on donations is smaller in areas with high levels of inequality at both neighbourhood and municipality levels.

Suggested Citation

  • A. Abigail Payne & Justin Smith, 2015. "Does income inequality increase charitable giving?," Canadian Journal of Economics, Canadian Economics Association, vol. 48(2), pages 793-818, May.
    • Handle: RePEc:cje:issued:v:48:y:2015:i:2:p:793-818
    DOI: 10.1111/caje.12144
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    Cited by:

    1. Debasis Mondal & Manash Ranjan Gupta, 2023. "Private provision of public good and endogenous income inequality," Indian Economic Review, Springer, vol. 58(2), pages 399-425, December.
    2. Yilong Xu & Ginevra Marandola, 2023. "The (negative) effects of inequality on Social Capital," Journal of Economic Surveys, Wiley Blackwell, vol. 37(5), pages 1562-1588, December.
    3. Duquette, Nicolas J., 2018. "Inequality and philanthropy: High-income giving in the United States 1917–2012," Explorations in Economic History, Elsevier, vol. 70(C), pages 25-41.
    4. Cai, Meina & Caskey, Gregory W. & Cowen, Nick & Murtazashvili, Ilia & Murtazashvili, Jennifer Brick & Salahodjaev, Raufhon, 2022. "Individualism, economic freedom, and charitable giving," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 868-884.
    5. Cha, Moon-Kyung & Yi, Youjae & Lee, Jaehoon, 2020. "When people low in social class become a persuasive source of communication: Social class of other donors and charitable donations," Journal of Business Research, Elsevier, vol. 112(C), pages 45-55.
    6. Duquette, Nicolas J. & Hargaden, Enda P., 2021. "Inequality and giving," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 189-200.
    7. Jackson, Jeremy & Beaulier, Scott, 2023. "Economic freedom and philanthropy," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 148-183.
    8. Senlin Li & Le Zhang & Yiying Sun & Fulin Li, 2024. "Revealing the impact of individual income inequality on different types of charitable giving in China through social interactions," Social Science Quarterly, Southwestern Social Science Association, vol. 105(4), pages 1351-1367, July.
    9. Hossein Sabzian & Alireza Aliahmadi & Adel Azar & Madjid Mirzaee, 2018. "Economic inequality and Islamic Charity: An exploratory agent-based modeling approach," Papers 1804.09284, arXiv.org.
    10. Nicolas J. Duquette & Enda Hargaden, 2018. "Inequality, Social Distance, and Giving," Working Papers 2018-03, University of Tennessee, Department of Economics.
    11. Suss, Joel H., 2023. "Higher income individuals are more generous when local economic inequality is high," LSE Research Online Documents on Economics 119632, London School of Economics and Political Science, LSE Library.

    More about this item

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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