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

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  • Cotofan, Maria
  • Matakos, Konstantinos

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

  • 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.
    • Handle: RePEc:ehl:lserod:121297
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    References listed on IDEAS

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    More about this item

    Keywords

    labour market shocks; scarring; redistribution; donations;
    All these keywords.

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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