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Effort and Redistribution: Better Cousins Than One Might Have Thought

Author

Listed:
  • Claudia M. Buch

    (Deutsche Bundesbank)

  • Christoph Engel

    (Max Planck Institute for Research on Collective Goods, Bonn)

Abstract

In this paper, we analyze the link between effort and preferences for redistribution. If individ-uals hold standard preferences, those with higher ability exert more effort. Higher effort leads to a higher income. Individuals with a higher income oppose redistribution. Yet, under non-standard preferences, the link between effort and redistribution is not clear-cut. If aversion to inequity is sufficiently strong, even individuals with high ability may support redistribution. In a lab experiment, we indeed find that participants with higher ability are willing to help the needy if earning income becomes more difficult for everybody. To check whether this finding is externally valid, we use data from the World Value Survey. We do not find a significant positive effect of preferences for effort on preferences for redistribution, but we also do not find the significant negative effect predicted by standard theory. Also, in the field, those who have to pay for redistribution are not more likely to be opposed than the recipients.

Suggested Citation

  • Claudia M. Buch & Christoph Engel, 2012. "Effort and Redistribution: Better Cousins Than One Might Have Thought," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2012_10, Max Planck Institute for Research on Collective Goods, revised Sep 2014.
    • Handle: RePEc:mpg:wpaper:2012_10
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    References listed on IDEAS

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    More about this item

    Keywords

    Effort; redistribution; ability; experiment; survey data; simultaneous equation model;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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