IDEAS home Printed from https://ideas.repec.org/p/cep/cepdps/dp1957.html
   My bibliography  Save this paper

Adapting or compounding? The effects of recurring labour shocks on stated and revealed preferences for redistribution

Author

Listed:
  • Maria Cotofan
  • Konstantinos Matakos

Abstract

The evidence on the impact of employment shocks on preferences for redistribution is mixed on stated outcomes and sparse on revealed ones. We conduct a survey of US workers to measure the impact of repeated labour market shocks on both stated and revealed redistributive preferences. We measure the former by support on seven different policies and the latter through donations. We look at experiences of both mild shocks (having to reduce working hours) and hard shocks (unemployment), as well as past unemployment during formative years. We find evidence of adaptation to unemployment on policy preferences and compounding for milder shocks on donations, suggesting that the effects of repeated shocks on preferences for redistribution are not independent. Our results show that unemployment impacts preferences in a self-interested way, while milder shocks lead to broader support for redistribution.

Suggested Citation

  • Maria Cotofan & Konstantinos Matakos, 2023. "Adapting or compounding? The effects of recurring labour shocks on stated and revealed preferences for redistribution," CEP Discussion Papers dp1957, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1957
    as

    Download full text from publisher

    File URL: https://cep.lse.ac.uk/pubs/download/dp1957.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Black, Nicole & De Gruyter, Elaine & Petrie, Dennis & Smith, Sarah, 2021. "Altruism born of suffering? The impact of an adverse health shock on pro-social behaviour," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 902-915.
    2. repec:bla:econom:v:68:y:2001:i:270:p:221-41 is not listed on IDEAS
    3. Cotofan, Maria & Dur, Robert & Meier, Stephen, 2021. "Does growing up in a recession increase compassion? The case of attitudes towards immigration," LSE Research Online Documents on Economics 114427, London School of Economics and Political Science, LSE Library.
    4. Roth, Christopher & Wohlfart, Johannes, 2018. "Experienced inequality and preferences for redistribution," Journal of Public Economics, Elsevier, vol. 167(C), pages 251-262.
    5. Ilyana Kuziemko & Michael I. Norton & Emmanuel Saez & Stefanie Stantcheva, 2015. "How Elastic Are Preferences for Redistribution? Evidence from Randomized Survey Experiments," American Economic Review, American Economic Association, vol. 105(4), pages 1478-1508, April.
    6. Gualtieri, Giovanni & Nicolini, Marcella & Sabatini, Fabio, 2019. "Repeated shocks and preferences for redistribution," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 53-71.
    7. Larrimore, Jeff & Mortenson, Jacob & Splinter, David, 2022. "Earnings shocks and stabilization during COVID-19," Journal of Public Economics, Elsevier, vol. 206(C).
    8. Italo Colantone & Piero Stanig, 2018. "The Trade Origins of Economic Nationalism: Import Competition and Voting Behavior in Western Europe," American Journal of Political Science, John Wiley & Sons, vol. 62(4), pages 936-953, October.
    9. Alexander W. Bartik & Marianne Bertrand & Feng Lin & Jesse Rothstein & Matthew Unrath, 2020. "Measuring the Labor Market at the Onset of the COVID-19 Crisis," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(2 (Summer), pages 239-268;316.
    10. Stefanie Stantcheva, 2021. "Understanding Tax Policy: How do People Reason?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(4), pages 2309-2369.
    11. Alesina, Alberto & La Ferrara, Eliana, 2005. "Preferences for redistribution in the land of opportunities," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 897-931, June.
    12. Marcus Eliason & Donald Storrie, 2006. "Lasting or Latent Scars? Swedish Evidence on the Long-Term Effects of Job Displacement," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 831-856, October.
    13. Kerwin Kofi Charles & Melvin Stephens, 2004. "Job Displacement, Disability, and Divorce," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 489-522, April.
    14. Till von Wachter, 2020. "Lost Generations: Long‐Term Effects of the COVID‐19 Crisis on Job Losers and Labour Market Entrants, and Options for Policy," Fiscal Studies, John Wiley & Sons, vol. 41(3), pages 549-590, September.
    15. Gianni De Fraja & Sara Lemos & James Rockey, 2021. "The Wounds That Do Not Heal: The Lifetime Scar of Youth Unemployment," Economica, London School of Economics and Political Science, vol. 88(352), pages 896-941, October.
    16. Ines Helm, 2020. "National Industry Trade Shocks, Local Labour Markets, and Agglomeration Spillovers," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 87(3), pages 1399-1431.
    17. Andrew Clark & Yannis Georgellis & Peter Sanfey, 2001. "Scarring: The Psychological Impact of Past Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 221-241, May.
    18. Hansen, Kerstin F. & Stutzer, Alois, 2021. "Experiencing Booms and Busts in the Welfare State and Support for Redistribution," IZA Discussion Papers 14327, Institute of Labor Economics (IZA).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cotofan, Maria & Matakos, Konstantinos, 2023. "Adapting or compounding? The effects of recurring labour shocks on stated and revealed preferences for redistribution," LSE Research Online Documents on Economics 121297, London School of Economics and Political Science, LSE Library.
    2. Heap, Shaun P. Hargreaves & Koop, Christel & Matakos, Konstantinos & Unan, Asli & Weber, Nina Sophie, 2021. "We Cannot Disagree Forever! Reality Polarization and Citizens’ Post-Pandemic Fiscal Adjustment Preferences," SocArXiv 69tup, Center for Open Science.
    3. Andrea Fazio & Tommaso Reggiani, 2022. "Minimum wage and tolerance for inequality," MUNI ECON Working Papers 2022-07, Masaryk University, revised Feb 2023.
    4. Jeffrey, Karen & Matakos, Konstantinos, 2024. "Automation anxiety, fairness perceptions, and redistribution: Past experiences condition the response to future job loss," Journal of Economic Behavior & Organization, Elsevier, vol. 221(C), pages 174-190.
    5. Jeffrey, Karen, 2021. "Automation and the future of work: How rhetoric shapes the response in policy preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 192(C), pages 417-433.
    6. Andrea Fazio, 2021. "Beautiful inequality: Are beautiful people more willing to redistribute?," Working Papers in Public Economics 194, University of Rome La Sapienza, Department of Economics and Law.
    7. Collewet, Marion & Fairley, Kim & Kessels, Roselinde & Knoef, Marike & van Vliet, Olaf, 2024. "The design of welfare: unraveling taxpayers' preferences," OSF Preprints 4am7e, Center for Open Science.
    8. Bellani, Luna & Berriochoa, Kattalina & Kapteina, Mark & Schwerdt, Guido, 2024. "Information Provision and Support for Inheritance Taxation: Evidence from a Representative Survey Experiment in Germany," IZA Discussion Papers 17099, Institute of Labor Economics (IZA).
    9. Gualtieri, Giovanni & Nicolini, Marcella & Sabatini, Fabio, 2019. "Repeated shocks and preferences for redistribution," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 53-71.
    10. Lergetporer, Philipp & Werner, Katharina & Woessmann, Ludger, 2020. "Educational inequality and public policy preferences: Evidence from representative survey experiments," Journal of Public Economics, Elsevier, vol. 188(C).
    11. Roth, Christopher & Settele, Sonja & Wohlfart, Johannes, 2022. "Beliefs about public debt and the demand for government spending," Journal of Econometrics, Elsevier, vol. 231(1), pages 165-187.
    12. Fehr Ernst & Epper Thomas & Senn Julien, 2020. "Social preferences and redistributive politics," ECON - Working Papers 339, Department of Economics - University of Zurich, revised Aug 2023.
    13. Andreoli, Francesco & Olivera, Javier, 2020. "Preferences for redistribution and exposure to tax-benefit schemes in Europe," European Journal of Political Economy, Elsevier, vol. 63(C).
    14. Campos-Vazquez, Raymundo M. & Krozer, Alice & Ramírez-Álvarez, Aurora A., 2023. "Preferred tax rates depend on the rates paid by the rich," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 104(C).
    15. Jante Parlevliet & Massimo Giuliodori & Matthijs Rooduijn, 2023. "Populist attitudes, fiscal illusion and fiscal preferences: evidence from Dutch households," Public Choice, Springer, vol. 197(1), pages 201-225, October.
    16. Patrick Bennett & Amine Ouazad, 2020. "Job Displacement, Unemployment, and Crime: Evidence from Danish Microdata and Reforms [The Link between Human Capital, Mass Layoffs, and Firm Deaths]," Journal of the European Economic Association, European Economic Association, vol. 18(5), pages 2182-2220.
    17. Summers, Kate & Accominotti, Fabien & Burchardt, Tania & Hecht, Katharina & Mann, Elizabeth & Mijs, Jonathan J.B, 2022. "Deliberating inequality: a blueprint for studying the social formation of beliefs about economic inequality," LSE Research Online Documents on Economics 114591, London School of Economics and Political Science, LSE Library.
    18. Busso, Matias & Ibáñez, Ana María & Messina, Julián & Quigua, Juliana, 2023. "Preferences for redistribution in Latin America," LSE Research Online Documents on Economics 120687, London School of Economics and Political Science, LSE Library.
    19. Lekfuangfu, Warn N. & Powdthavee, Nattavudh & Riyanto, Yohanes E., 2023. "Luck or rights? An experiment on preferences for redistribution following inheritance of opportunity," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 106(C).
    20. Bellani Luna & Fazio Andrea & Scervini Francesco, 2023. "Collective negative shocks and preferences for redistribution: Evidence from the COVID-19 crisis in Germany," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(2), pages 381-403, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cep:cepdps:dp1957. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://cep.lse.ac.uk/_new/publications/discussion-papers/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.