Social Mobility and Redistributive Taxation

46 Pages Posted: 30 Dec 2010 Last revised: 30 Dec 2011

See all articles by Kai A. Konrad

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Florian Morath

Goethe University Frankfurt; Max Planck Institute for Tax Law and Public Finance

Multiple version iconThere are 3 versions of this paper

Date Written: January 1, 2011

Abstract

We investigate redistributive taxation in a political economy experiment and determine how different patterns of social mobility affect the choices of redistributional taxes. In the absence of social mobility, voters choose tax rates that are very well in line with the prediction derived in the standard framework by Meltzer and Richard (1981). However, past or future changes in the income hierarchy affect the choice of the tax rate in the current period. The same is true for social mobility within the period to which the tax rate choice applies and for the case where the choice of the tax rate takes place behind the veil of ignorance. Due to our design of the experiment, these strong effects of own social mobility cannot be attributed to social or other-regarding preferences.

Keywords: Redistribution, median voter, social mobility

JEL Classification: D72, D78, H20

Suggested Citation

Konrad, Kai A. and Morath, Florian, Social Mobility and Redistributive Taxation (January 1, 2011). Max Planck Institute for Tax Law and Public Finance Working Paper No. 2011-02. Available at SSRN: https://ssrn.com/abstract=1731825 or http://dx.doi.org/10.2139/ssrn.1731825

Kai A. Konrad (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/home.cfm

Centre for Economic Policy Research (CEPR)

90-98 Goswell Road
London, EC1V 7RR
United Kingdom

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

Poschinger Str. 5
Munich, 81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, 53072
Germany

Florian Morath

Goethe University Frankfurt ( email )

Gr├╝neburgplatz 1
Frankfurt am Main, 60323
Germany

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

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