Effort and Redistribution: Better Cousins Than One Might Have Thought
50 Pages Posted: 28 Apr 2012 Last revised: 2 Sep 2014
Date Written: September 2014
In this paper, we analyze the link between effort and preferences for redistribution. If individuals hold standard preferences, those with higher ability exert more effort. Higher effort leads to a higher income. Individuals with a higher income oppose redistribution. Yet, under non-standard preferences, the link between effort and redistribution is not clear-cut. If aversion to inequity is sufficiently strong, even individuals with high ability may support redistribution. In a lab experiment, we indeed find that participants with higher ability are willing to help the needy if earning income becomes more difficult for everybody. To check whether this finding is externally valid, we use data from the World Value Survey. We do not find a significant positive effect of preferences for effort on preferences for redistribution, but we also do not find the significant negative effect predicted by standard theory. Also, in the field, those who have to pay for redistribution are not more likely to be opposed than the recipients.
Keywords: Effort, redistribution, ability, experiment, survey data, simultaneous equation model
JEL Classification: C91, C31, D31, J28
Suggested Citation: Suggested Citation