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Why does the amount of income redistribution differ between United States and Europe? The Janus face of Switzerland

Author

Listed:
  • Sule Akkoyunlu

    () (Socioeconomic Institute, University of Zurich)

  • Ilja Neustadt

    () (Socioeconomic Institute, University of Zurich)

  • Peter Zweifel

    () (Socioeconomic Institute, University of Zurich)

Abstract

In this paper, the amount of income redistribution in the United States, the European Union, and Switzerland is compared and empirically related to economic, political, and behavioral determinants elaborated in the literature. Lying in between the two poles, Switzerland provides unique evidence about the relative merits of competing hypotheses. It tips the balance against the economic explanation, which predicts more rather than less income redistribution in the United States compared to the EU. It only weakly supports the political model linking proportional representation and multiparty structure (which also characterize Switzerland) to redistribution; yet the Swiss share of transfers in the GDP is low. Behavioral explanations receive a good deal of support from the case of Switzerland, a country that shares with the United States the belief that hard work rather than luck, birth, connections, and corruption determine wealth. In this way, the Janus face of Switzerland may help to explain the difference in the amount of U.S. and EU income redistribution.

Suggested Citation

  • Sule Akkoyunlu & Ilja Neustadt & Peter Zweifel, 2008. "Why does the amount of income redistribution differ between United States and Europe? The Janus face of Switzerland," SOI - Working Papers 0810, Socioeconomic Institute - University of Zurich.
  • Handle: RePEc:soz:wpaper:0810
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    File URL: http://www.econ.uzh.ch/static/wp_soi/wp0810.pdf
    File Function: revised version, 2009
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    Citations

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    Cited by:

    1. Ilja Neustadt & Peter Zweifel, 2010. "Is the Welfare State Sustainable? Experimental Evidence on Citizens’ Preferences for Redistribution," SOI - Working Papers 1003, Socioeconomic Institute - University of Zurich.
    2. Michele Sennhauser, 2009. "Why the Linear Utility Function is a Risky Choice in Discrete-Choice Experiments," SOI - Working Papers 1014, Socioeconomic Institute - University of Zurich.
    3. Polk, Andreas & Schmutzler, Armin & Müller, Adrian, 2014. "Lobbying and the power of multinational firms," European Journal of Political Economy, Elsevier, vol. 36(C), pages 209-227.

    More about this item

    Keywords

    Redistribution; Income Mobility; Openness; Political Economy; Beliefs; Religion; Immigration;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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