IDEAS home Printed from https://ideas.repec.org/p/osf/socarx/867s2.html
   My bibliography  Save this paper

Redistribution and Insurance in Welfare States Around the World

Author

Listed:
  • , Stone Center

    (The Graduate Center/CUNY)

  • Bartels, Charlotte
  • Neumann, Dirk

Abstract

Redistribution across individuals in a one-year-period framework is an empirically intensely studied question. However, a substantial share of annual redistribution might turn out to serve individual insurance in a longer perspective, reducing the level of actual redistribution across individuals. This paper investigates to what extent long-run redistribution diverges from annual redistribution in welfare states of different types. Exploiting panel data from the Cross-National Equivalent File (CNEF) for Australia, Germany, South Korea, Switzerland, the United Kingdom, and the United States, we find that welfare states like Germany that are assumed to engage in a high level of redistribution actually achieve relatively less redistribution between individuals in the long run than the United Kingdom or the United States. Regression results show that a higher share of elderly in a country is associated with more annual redistribution, but with less long-run redistribution between individuals. The results suggest that, in welfare states with aging populations, we might expect growing annual redistribution that, to a substantial extent, is in fact income smoothing for the elderly. (Stone Center on Socio-Economic Inequality Working Paper Series)

Suggested Citation

  • , Stone Center & Bartels, Charlotte & Neumann, Dirk, 2020. "Redistribution and Insurance in Welfare States Around the World," SocArXiv 867s2, Center for Open Science.
  • Handle: RePEc:osf:socarx:867s2
    DOI: 10.31219/osf.io/867s2
    as

    Download full text from publisher

    File URL: https://osf.io/download/5f63c08c12544a0047401eb5/
    Download Restriction: no

    File URL: https://libkey.io/10.31219/osf.io/867s2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
    2. Harry Ter Rele, 2007. "Measuring The Lifetime Redistribution Achieved By Dutch Taxation, Cash Transfer And Non‐Cash Benefits Programs," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(2), pages 335-362, June.
    3. 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.
    4. Corneo, Giacomo & Gruner, Hans Peter, 2002. "Individual preferences for political redistribution," Journal of Public Economics, Elsevier, vol. 83(1), pages 83-107, January.
    5. Alberto Alesina & George-Marios Angeletos, 2005. "Fairness and Redistribution," American Economic Review, American Economic Association, vol. 95(4), pages 960-980, September.
    6. Tabellini, Guido, 2000. " A Positive Theory of Social Security," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 523-545, June.
    7. Michael Baker & Gary Solon, 2003. "Earnings Dynamics and Inequality among Canadian Men, 1976-1992: Evidence from Longitudinal Income Tax Records," Journal of Labor Economics, University of Chicago Press, vol. 21(2), pages 267-288, April.
    8. Assaf Razin & Efraim Sadka & Phillip Swagel, 2002. "The Aging Population and the Size of the Welfare State," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 900-918, August.
    9. Blundell, Richard & Graber, Michael & Mogstad, Magne, 2015. "Labor income dynamics and the insurance from taxes, transfers, and the family," Journal of Public Economics, Elsevier, vol. 127(C), pages 58-73.
    10. Francesco Scervini, 2012. "Empirics of the median voter: democracy, redistribution and the role of the middle class," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(4), pages 529-550, December.
    11. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October.
    12. Buchanan, James M., 1976. "Taxation in fiscal exchange," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 17-29.
    13. Charlotte Bartels, 2012. "Redistribution and Insurance in the German Welfare State," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 132(2), pages 265-295.
    14. Shin, Donggyun & Solon, Gary, 2011. "Trends in men's earnings volatility: What does the Panel Study of Income Dynamics show?," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 973-982, August.
    15. Peter Haan & Daniel Kemptner & Victoria Prowse, 2017. "Insurance, Redistribution, and the Inequality of Lifetime Income," Discussion Papers of DIW Berlin 1716, DIW Berlin, German Institute for Economic Research.
    16. 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.
    17. Wen‐Hao Chen, 2009. "Cross‐National Differences In Income Mobility: Evidence From Canada, The United States, Great Britain And Germany," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(1), pages 75-100, March.
    18. Peter Levell & Barra Roantree & Jonathan Shaw, 2021. "Mobility and the lifetime distributional impact of tax and transfer reforms," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(4), pages 751-793, August.
    19. Cappellari, Lorenzo & Jenkins, Stephen P., 2014. "Earnings and labour market volatility in Britain, with a transatlantic comparison," Labour Economics, Elsevier, vol. 30(C), pages 201-211.
    20. Bönke, Timm & Grabka, Markus M. & Schröder, Carsten & Wolff, Edward N., 2020. "A Head-to-Head Comparison of Augmented Wealth in Germany and the United States," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 122(3), pages 1140-1180.
    21. Haider, Steven J, 2001. "Earnings Instability and Earnings Inequality of Males in the United States: 1967-1991," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 799-836, October.
    22. Nelissen, Jan H. M., 1998. "Annual versus lifetime income redistribution by social security," Journal of Public Economics, Elsevier, vol. 68(2), pages 223-249, May.
    23. Svend E. Hougaard Jensen & Morten I. Lau & Panu Poutvaara, 2004. "Efficiency and Equity Aspects of Alternative Social Security Rules," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 60(3), pages 325-358, September.
    24. Erzo F. P. Luttmer, 2001. "Group Loyalty and the Taste for Redistribution," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 500-528, June.
    25. Matz Dahlberg & Karin Edmark & Heléne Lundqvist, 2012. "Ethnic Diversity and Preferences for Redistribution," Journal of Political Economy, University of Chicago Press, vol. 120(1), pages 41-76.
    26. Glazer, Amihai & Kanniainen, Vesa & Poutvaara, Panu, 2008. "Income taxes, property values, and migration," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 915-923, April.
    27. Guido Tabellini, 2000. "A Positive Theory of Social Security," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 523-545, September.
    28. Hoynes, Hilary W. & Luttmer, Erzo F.P., 2011. "The insurance value of state tax-and-transfer programs," Journal of Public Economics, Elsevier, vol. 95(11), pages 1466-1484.
    29. Niklas Bengtsson & Bertil Holmlund & Daniel Waldenström, 2016. "Lifetime versus Annual Tax-and-Transfer Progressivity: Sweden, 1968–2009," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(4), pages 619-645, October.
    30. Casamatta, Georges & Cremer, Helmuth & Pestieau, Pierre, 2000. "Political sustainability and the design of social insurance," Journal of Public Economics, Elsevier, vol. 75(3), pages 341-364, March.
    31. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December.
    32. Nelissen, Jan H M, 1995. "Lifetime Income Redistribution by Social Security," Journal of Population Economics, Springer;European Society for Population Economics, vol. 8(1), pages 89-105, February.
    33. Robert A. Moffitt & Peter Gottschalk, 2012. "Trends in the Transitory Variance of Male Earnings: Methods and Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 47(1), pages 204-236.
    34. Cappellari, Lorenzo & Jenkins, Stephen P., 2014. "Earnings and labour market volatility in Britain, with a transatlantic comparison," Labour Economics, Elsevier, vol. 30(C), pages 201-211.
    35. Susan Dynarski & Jonathan Gruber, 1997. "Can Families Smooth Variable Earnings?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 229-303.
    36. Ravallion, Martin & Lokshin, Michael, 2000. "Who wants to redistribute?: The tunnel effect in 1990s Russia," Journal of Public Economics, Elsevier, vol. 76(1), pages 87-104, April.
    37. Moene, Karl Ove & Wallerstein, Michael, 2001. "Inequality, Social Insurance, and Redistribution," American Political Science Review, Cambridge University Press, vol. 95(4), pages 859-874, December.
    38. Charlotte Bartels & Timm Bönke, 2013. "Can Households And Welfare States Mitigate Rising Earnings Instability?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(2), pages 250-282, June.
    39. Charles M. Beach & Ross Finnie & David Gray, 2010. "Long‐Run Inequality And Short‐Run Instability Of Men'S And Women'S Earnings In Canada," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(3), pages 572-596, September.
    40. Joakim Palme & Walter Korpi, 1998. "The Paradox of Redistribution and Strategies of Equality: Welfare State Institutions, Inequality and Poverty in the Western Countries," LIS Working papers 174, LIS Cross-National Data Center in Luxembourg.
    41. A. Bovenberg & Martin Hansen & Peter Sørensen, 2008. "Individual savings accounts for social insurance: rationale and alternative designs," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(1), pages 67-86, February.
    42. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2014. "Consumption and Labor Supply with Partial Insurance: An Analytical Framework," American Economic Review, American Economic Association, vol. 104(7), pages 2075-2126, July.
    43. Dynan Karen & Elmendorf Douglas & Sichel Daniel, 2012. "The Evolution of Household Income Volatility," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(2), pages 1-42, December.
    44. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
    45. Milanovic, Branko, 2000. "The median-voter hypothesis, income inequality, and income redistribution: an empirical test with the required data," European Journal of Political Economy, Elsevier, vol. 16(3), pages 367-410, September.
    46. Fong, Christina, 2001. "Social preferences, self-interest, and the demand for redistribution," Journal of Public Economics, Elsevier, vol. 82(2), pages 225-246, November.
    47. Bovenberg, A.L. & Hansen, M. & Sorensen, P.B., 2008. "Individual savings accounts for social insurance : Rationale and alternative designs," Other publications TiSEM 72e236b0-ad63-4bea-a314-6, Tilburg University, School of Economics and Management.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Brewer, Mike & Joyce, Robert & Waters, Tom & Woods, Joseph, 2020. "A method for decomposing the impact of reforms on the long-run income distribution, with an application to universal credit," Economics Letters, Elsevier, vol. 192(C).
    2. Olga Cantó & Carmelo García Pérez & Marina Romaguera de la Cruz, 2023. "The Role of Tax-Benefit Systems in Shaping Economic Insecurity in the European Union," Hacienda Pública Española / Review of Public Economics, IEF, vol. 247(4), pages 7-36, December.

    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. Kuhn, Andreas, 2012. "Redistributive Preferences, Redistribution, and Inequality: Evidence from a Panel of OECD Countries," IZA Discussion Papers 6721, Institute of Labor Economics (IZA).
    2. Andreas Kuhn, 2012. "Redistributive Preferences, Redistribution and Inequality: Evidence from a Panel of OECD Countries," NRN working papers 2012-08, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    3. Andreas Kuhn, 2012. "Redistributive preferences, redistribution, and inequality: Evidence from a panel of OECD countries," ECON - Working Papers 084, Department of Economics - University of Zurich.
    4. Corneo, Giacomo & Neher, Frank, 2015. "Democratic redistribution and rule of the majority," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 96-109.
    5. Neher, Frank, 2012. "Preferences for redistribution around the world," Discussion Papers 2012/2, Free University Berlin, School of Business & Economics.
    6. Joan Costa-Font & Frank Cowell, 2015. "Social Identity And Redistributive Preferences: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(2), pages 357-374, April.
    7. Markus Jäntti & Stephen P. Jenkins, 2013. "Income Mobility," SOEPpapers on Multidisciplinary Panel Data Research 607, DIW Berlin, The German Socio-Economic Panel (SOEP).
    8. Silvia Avram & Mike Brewer & Paul Fisher & Laura Fumagalli, 2022. "Household Earnings and Income Volatility in the UK, 2009–2017," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(2), pages 345-369, June.
    9. Neher, Frank, 2012. "Preferences for Redistribution around the World," Working Papers 26/2012, Universidade Portucalense, Centro de Investigação em Gestão e Economia (CIGE).
    10. Anil Duman, 2013. "Beliefs, Economic Volatility, and Redistributive Preferences Across Developing Countries," The Developing Economies, Institute of Developing Economies, vol. 51(2), pages 203-218, June.
    11. Laméris, Maite D. & Garretsen, Harry & Jong-A-Pin, Richard, 2020. "Political ideology and the intragenerational prospect of upward mobility," European Journal of Political Economy, Elsevier, vol. 62(C).
    12. Joan Esteban & Laurence Kranich, 2003. "The Social Contracts with Endogenous Sentiments," Working Papers 71, Barcelona School of Economics.
    13. Elvire Guillaud, 2008. "Preferences for redistribution: a European comparative analysis," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-00586260, HAL.
    14. Erzo F. P. Luttmer & Monica Singhal, 2011. "Culture, Context, and the Taste for Redistribution," American Economic Journal: Economic Policy, American Economic Association, vol. 3(1), pages 157-179, February.
    15. Andreas Georgiadis & Alan Manning, 2012. "Spend it like Beckham? Inequality and redistribution in the UK, 1983–2004," Public Choice, Springer, vol. 151(3), pages 537-563, June.
    16. Matteo Cervellati & Joan-Maria Esteban & Laurence Kranich, 2010. "Work Values, Endogenous Sentiments and Redistribution," Working Papers 434, Barcelona School of Economics.
    17. Pfarr, Christian, 2012. "Meltzer-Richard and social mobility hypothesis: revisiting the income-redistribution nexus using German choice data," MPRA Paper 43325, University Library of Munich, Germany.
    18. Pittau, Maria Grazia & Farcomeni, Alessio & Zelli, Roberto, 2016. "Has the attitude of US citizens towards redistribution changed over time?," Economic Modelling, Elsevier, vol. 52(PB), pages 714-724.
    19. Cervellati, Matteo & Esteban, Joan & Kranich, Laurence, 2010. "Work values, endogenous sentiments redistribution," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 612-627, October.
    20. Javier Olivera, 2015. "Preferences for redistribution in Europe," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-18, December.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:osf:socarx:867s2. 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: OSF (email available below). General contact details of provider: https://arabixiv.org .

    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.