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Religion, Income Inequality, and the Size of the Government


Ceyhun Elgin


Boğaziçi University

Mehmet Y. Gurdal


TOBB University of Economics and Technology

Turkmen Goksel


Ankara University - Department of Economics

Cuneyt Orman


Central Bank of Turkey

September 17, 2010

Economic Modelling, Vol. 30, 2013

Abstract:     
Recent empirical research has demonstrated that countries with higher levels of religiosity are characterized by greater income inequality. We argue that this is due to the lower level of government services demanded in more religious countries. Religion requires that individuals make financial sacrifices and this leads the religious to prefer making their contributions voluntarily rather than through mandatory means. To the extent that citizen preferences are reflected in policy outcomes, religiosity results in lower taxes, which in turn implies lower levels of spending on both public goods and redistribution. Since measures of income typically do not fully take into account the part of income coming from donations received, this increases measured income inequality. We formalize these ideas in a general equilibrium political economy model and also show that the implications of our model are supported by cross-country data.

Number of Pages in PDF File: 33

Keywords: Religion, Voluntary Donations, Taxation, Redistribution, Income Inequality

JEL Classification: D63, H20, Z12

Accepted Paper Series


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Date posted: September 19, 2010 ; Last revised: March 8, 2013

Suggested Citation

Elgin, Ceyhun and Gurdal, Mehmet Y. and Goksel, Turkmen and Orman, Cuneyt, Religion, Income Inequality, and the Size of the Government (September 17, 2010). Economic Modelling, Vol. 30, 2013. Available at SSRN: http://ssrn.com/abstract=1679283 or http://dx.doi.org/10.2139/ssrn.1679283

Contact Information

Ceyhun Elgin
Bogazici University ( email )
Bebek, İstanbul 34342
Turkey
Mehmet Y. Gurdal
TOBB University of Economics and Technology ( email )
Turkey
Turkmen Goksel
Ankara University - Department of Economics ( email )
TR-06590 Cebeci
Ankara
Turkey
Cuneyt Orman (Contact Author)
Central Bank of Turkey ( email )
Istiklal Cd. No: 10 Ulus
Ankara, 06100
Turkey
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