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Work Values, Endogenous Sentiments and Redistribution

Author

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  • Matteo Cervellati
  • Joan-Maria Esteban
  • Laurence Kranich

Abstract

We examine the interactions between individual behavior, sentiments and the social contract in a model of rational voting over redistribution. Agents have moral "work values". Individuals' self-esteem and social consideration of others are endogenously determined comparing behaviors to moral standards. Attitudes toward redistribution depend on self-interest and social preferences. We characterize the politico-economic equilibria in which sentiments, labor supply and redistribution are determined simultaneously. The equilibria feature different degrees of "social cohesion" and redistribution depending on pre-tax income inequality. In clustered equilibria the poor are held partly responsible for their low income since they work less than the moral standard and hence redistribution is low. The paper proposes a novel explanation for the emergence of different sentiments and social contracts across countries. The predictions appear broadly in line with well-documented differences between the United States and Europe.

Suggested Citation

  • Matteo Cervellati & Joan-Maria Esteban & Laurence Kranich, 2010. "Work Values, Endogenous Sentiments and Redistribution," Working Papers 434, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:434
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    Citations

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    Cited by:

    1. Cervellati, Matteo & Vanin, Paolo, 2013. "“Thou shalt not covet”: Prohibitions, temptation and moral values," Journal of Public Economics, Elsevier, pages 15-28.
    2. Robin Boadway & Nicolas-Guillaume Martineau, 2013. "Normative Analysis with Societal Constraints," CESifo Working Paper Series 4305, CESifo Group Munich.
    3. repec:aia:ginidp:dp17 is not listed on IDEAS
    4. SCHOKKAERT, Erik & TRUYTS, Tom, 2014. "Preferences for redistribution and social structure," CORE Discussion Papers 2014001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Cicognani, Simona & Mittone, Luigi, 2014. "Social norms or low-cost heuristics? An experimental investigation of imitative behavior," Economics Discussion Papers 2014-2, Kiel Institute for the World Economy (IfW).
    6. Cervellati, Matteo & Vanin, Paolo, 2013. "“Thou shalt not covet”: Prohibitions, temptation and moral values," Journal of Public Economics, Elsevier, pages 15-28.
    7. Corneo, Giacomo, 2013. "Work norms, social insurance and the allocation of talent," Journal of Public Economics, Elsevier, pages 79-92.
    8. S. Bowles & S. Polania-Reyes., 2013. "Economic Incentives and Social Preferences: Substitutes or Complements?," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 4.
    9. Gilles Le Garrec, 2014. "Fairness, socialization and the cultural deman for redistribution," Sciences Po publications 2014-20, Sciences Po.
    10. Luna Bellani & Heinrich Ursprung, 2016. "The Political Economy of Redistribution Policy," CESifo Working Paper Series 6189, CESifo Group Munich.
    11. Corneo, Giacomo & Neher, Frank, 2015. "Democratic redistribution and rule of the majority," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 96-109.
    12. Corneo, Giacomo, 2013. "Work norms, social insurance and the allocation of talent," Journal of Public Economics, Elsevier, pages 79-92.
    13. Corneo, Giacomo, 2012. "Social insurance, work norms, and the allocation of talent," CEPR Discussion Papers 9028, C.E.P.R. Discussion Papers.
    14. Giacomo Corneo, 2011. "GINI DP 17: Income Inequality, Value Systems and Macroeconomic Performance," GINI Discussion Papers 17, AIAS, Amsterdam Institute for Advanced Labour Studies.
    15. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A preference-Based Lucas Critique of Public Policy," UMASS Amherst Economics Working Papers 2009-11, University of Massachusetts Amherst, Department of Economics.
    16. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A Preference-based Lucas Critique of Public Policy," CESifo Working Paper Series 2734, CESifo Group Munich.
    17. Gilles Le Garrec, 2014. "Fairness, socialization and the cultural deman for redistribution," Documents de Travail de l'OFCE 2014-20, Observatoire Francais des Conjonctures Economiques (OFCE).
    18. repec:spr:sochwe:v:49:y:2017:i:3:d:10.1007_s00355-016-0996-6 is not listed on IDEAS
    19. Samuel Bowles & Sandra Polania-Reyes, 2011. "Economic incentives and social preferences: substitutes or complements?," Department of Economics University of Siena 617, Department of Economics, University of Siena.

    More about this item

    Keywords

    social contract; Endogenous Sentiments; Voting over Taxes; Moral Work Values;

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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