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Social Mobility and the Demand for Redistribution: The POUM Hypothesis

  • Benabou, R.
  • Ok, E.A.

Even people with income below average will not support high rates of redistribution, because of the prospect of upward mobility: they take into account the fact the they, or their children, may move up in the income distribution, and therefore be hurt by high tax rates. This "intuitive" hypothesis is commonly advanced as part of the explanation for why democracies, where a relatively poor majority holds the political power, do not engage in large-scale expropriation and redistribution. But does it make sense, or does it require that some of the poor overemphasize the prospects of good outcomes relative to bad ones, due either to irrationally optimistic expectations or to a form of risk-loving?

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File URL: http://econ.as.nyu.edu/docs/IO/9381/RR98-23.PDF
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Paper provided by C.V. Starr Center for Applied Economics, New York University in its series Working Papers with number 98-23.

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Length: 31 pages
Date of creation: 1998
Date of revision:
Handle: RePEc:cvs:starer:98-23
Contact details of provider: Postal: C.V. Starr Center, Department of Economics, New York University, 19 W. 4th Street, 6th Floor, New York, NY 10012
Phone: (212) 998-8936
Fax: (212) 995-3932
Web page: http://econ.as.nyu.edu/object/econ.cvstarr.html
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Order Information: Postal: C.V. Starr Center, Department of Economics, New York University, 19 W. 4th Street, 6th Floor, New York, NY 10012
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  1. Piketty, Thomas, 1995. "Social Mobility and Redistributive Politics," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 551-84, August.
  2. Giacomo Bonanno & John Roemer & Louis Putterman & Wen Hai & Shunli Yao, 2003. "Does Egalitarianism Have a Future?," Working Papers 969, University of California, Davis, Department of Economics.
  3. repec:att:wimass:9722 is not listed on IDEAS
  4. Persson, T. & Tabellini, G., 1993. "Is Inequality Harmful for Growth," Papers 537, Stockholm - International Economic Studies.
  5. repec:att:wimass:9329 is not listed on IDEAS
  6. Alesina, Alberto F & Rodrik, Dani, 1991. "Distributive Politics and Economic Growth," CEPR Discussion Papers 565, C.E.P.R. Discussion Papers.
  7. Dardanoni Valentino, 1993. "Measuring Social Mobility," Journal of Economic Theory, Elsevier, vol. 61(2), pages 372-394, December.
  8. Hirschman, Albert O & Rothschild, Michael, 1973. "The Changing Tolerance for Income Inequality in the Course of Economic Development; with a Mathematical Appendix," The Quarterly Journal of Economics, MIT Press, vol. 87(4), pages 544-66, November.
  9. Benabou, R. & Ok, E.A., 1998. "Social Mobility and the Demand for Redistribution: The POUM Hypothesis," Working Papers 98-23, C.V. Starr Center for Applied Economics, New York University.
  10. Pierre-Olivier Gourinchas & Jonathan A. Parker, 1999. "Consumption Over the Life Cycle," NBER Working Papers 7271, National Bureau of Economic Research, Inc.
  11. Roemer, John E., 1998. "Why the poor do not expropriate the rich: an old argument in new garb," Journal of Public Economics, Elsevier, vol. 70(3), pages 399-424, December.
  12. Francisco Marhuenda & Ignacio Ortuño Ortín, 1995. "Popular Support For Progressive Taxation," Working Papers. Serie AD 1995-15, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  13. Marhuenda, Francisco & Ortuno-Ortin, Ignacio, 1995. "Popular support for progressive taxation," Economics Letters, Elsevier, vol. 48(3-4), pages 319-324, June.
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