Social Mobility and the Demand for Redistribution : the POUM Hypothesis
Even relatively poor people oppose high rates of redistribution because of the anticipation that they, or their children, may move up the income ladder. This ‘Prospect of Upward Mobility’ (POUM) hypothesis is commonly advanced to explain why democracies do not engage in large-scale progressive redistributions. But is it compatible with rational expectations, given that not everyone can end up richer than average? This paper establishes the formal basis for the POUM hypothesis. There is a range of incomes below average where agents oppose lasting redistributions, provided tomorrow’s expected income is increasing and concave in today’s income. The laissez-faire coalition is larger the more concave the transition function and the longer the political horizon. We illustrate the general analysis with an example (calibrated to the United States) where three-quarters of families are always poorer than average, yet a two-thirds majority has expected future incomes above the mean. We also analyse mobility matrices from the Panel Study on Income Dynamics (PSID) and find significant evidence of the POUM effect.
(This abstract was borrowed from another version of this item.)
|Date of creation:||1997|
|Date of revision:||1999|
|Contact details of provider:|| Postal: Manufacture des Tabacs, Aile Jean-Jacques Laffont, 21 Allée de Brienne, 31000 TOULOUSE|
Phone: +33 (0)5 61 12 85 89
Fax: + 33 (0)5 61 12 86 37
Web page: http://www.idei.fr/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rodrik, Dani & Alesina, Alberto, 1994.
"Distributive Politics and Economic Growth,"
4551798, Harvard University Department of Economics.
- Pierre-Olivier Gourinchas & Jonathan A. Parker, 2002.
"Consumption Over the Life Cycle,"
Econometric Society, vol. 70(1), pages 47-89, January.
- Gourinchas, Pierre-Olivier & Parker, Jonathan A, 2000. "Consumption Over the Life-Cycle," CEPR Discussion Papers 2345, C.E.P.R. Discussion Papers.
- Gourinchas, P.O. & Parker, J.A., 1997. "Consumption Over the Life Cycle," Working papers 9722, Wisconsin Madison - Social Systems.
- Pierre-Olivier Gourinchas & Jonathan A. Parker, 1999. "Consumption Over the Life Cycle," NBER Working Papers 7271, National Bureau of Economic Research, Inc.
- 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).
- Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 465-490.
- Marhuenda, Francisco & Ortuno-Ortin, Ignacio, 1995. "Popular support for progressive taxation," Economics Letters, Elsevier, vol. 48(3-4), pages 319-324, June.
- Thomas Piketty, 1994.
"Social Mobility and Redistributive Politics,"
94-15, Massachusetts Institute of Technology (MIT), Department of Economics.
- Giacomo Bonanno & John Roemer & Louis Putterman & Wen Hai & Shunli Yao, 2003.
"Does Egalitarianism Have a Future?,"
969, University of California, Davis, Department of Economics.
- Benabou, R. & Ok, E.A., 1998.
"Social Mobility and the Demand for Redistribution: The POUM Hypothesis,"
98-23, C.V. Starr Center for Applied Economics, New York University.
- Roland Benabou & Efe A. Ok, 2001. "Social Mobility and the Demand for Redistribution: The Poum Hypothesis," The Quarterly Journal of Economics, Oxford University Press, vol. 116(2), pages 447-487.
- Bénabou, Roland & Ok, Efe A, 1998. "Social Mobility and the Demand for Redistribution: the POUM Hypothesis," CEPR Discussion Papers 1955, C.E.P.R. Discussion Papers.
- Bénabou, Roland & Ok, Efe, 1997. "Social Mobility and the Demand for Redistribution : the POUM Hypothesis," IDEI Working Papers 78, Institut d'Économie Industrielle (IDEI), Toulouse, revised 1999.
- Roland Benabou & Efe A. Ok, 1998. "Social Mobility and the Demand for Redistribution: The POUM Hypothesis," NBER Working Papers 6795, National Bureau of Economic Research, Inc.
- Persson, Torsten & Tabellini, Guido, 1994.
"Is Inequality Harmful for Growth?,"
American Economic Review,
American Economic Association, vol. 84(3), pages 600-621, June.
- Albert O. Hirschman & Michael Rothschild, 1973. "The Changing Tolerance for Income Inequality in the Course of Economic DevelopmentWith A Mathematical Appendix," The Quarterly Journal of Economics, Oxford University Press, vol. 87(4), pages 544-566.
- 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.
- Dardanoni Valentino, 1993. "Measuring Social Mobility," Journal of Economic Theory, Elsevier, vol. 61(2), pages 372-394, December.
- Durlauf, S.N. & Cooper, S.J. & Johnson, P.A., 1993. "On the Evolution of Economic Status Across Generations," Working papers 9329, Wisconsin Madison - Social Systems.
When requesting a correction, please mention this item's handle: RePEc:ide:wpaper:701. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.