(Post-) Materialist Attitudes and the Mix of Capital and Labour Taxation

32 Pages Posted: 3 Sep 2008

See all articles by Tobias König

Tobias König

University of Hannover

Andreas Wagener

Leibniz Universität Hannover - Economics and Business Administration Area; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Vienna University of Economics and Business Administration

Date Written: August 2008

Abstract

Social values shape policy outcomes. We examine the role of postmaterialism, a widely used concept in the social sciences, for the mix of capital and labour taxation chosen by a society. Following political scientist Inglehart, we define the degree of postmaterialism as the relative importance which individuals or a society as a whole ascribe to non-material values over material things. We incorporate this notion into a simple tax model for a small open economy. We show that a greater emphasis on immaterial values will lower the ratio of capital to labour taxes. Subsequently, we test our theoretical results empirically, using a panel data set comprising 17 OECD countries over the period 1981-2000. Proxies for the degree of postmaterialism are developed from the World Values Surveys. Their impact on the tax mix is highly significant and goes into the theoretically predicted direction.

Keywords: culture economics, social values, postmaterialism, taxation

JEL Classification: Z13, E62, H20

Suggested Citation

König, Tobias and Wagener, Andreas, (Post-) Materialist Attitudes and the Mix of Capital and Labour Taxation (August 2008). CESifo Working Paper Series No. 2366, Available at SSRN: https://ssrn.com/abstract=1243184

Tobias König

University of Hannover ( email )

Koenigsworther Platz 1
30167 Hannover, DE 30167
Germany

Andreas Wagener (Contact Author)

Leibniz Universität Hannover - Economics and Business Administration Area ( email )

Koenigsworther Platz 1
30167 Hannover
Germany

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Vienna University of Economics and Business Administration ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

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