Effort and Redistribution: Better Cousins Than One Might Have Thought

50 Pages Posted: 28 Apr 2012 Last revised: 2 Sep 2014

See all articles by Claudia M. Buch

Claudia M. Buch

Deutsche Bundesbank

Christoph Engel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Bonn - Faculty of Law & Economics; Erasmus University Rotterdam (EUR), Erasmus School of Law, Rotterdam Institute of Law and Economics, Students; Universität Osnabrück - Faculty of Law

Multiple version iconThere are 2 versions of this paper

Date Written: September 2014

Abstract

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

Buch, Claudia M. and Engel, Christoph, Effort and Redistribution: Better Cousins Than One Might Have Thought (September 2014). MPI Collective Goods Preprint, No. 2012/10. Available at SSRN: https://ssrn.com/abstract=2046505 or http://dx.doi.org/10.2139/ssrn.2046505

Claudia M. Buch

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Christoph Engel (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany
+049 228 914160 (Phone)
+049 228 9141655 (Fax)

HOME PAGE: http://www.coll.mpg.de/engel.html

University of Bonn - Faculty of Law & Economics

Postfach 2220
D-53012 Bonn
Germany

Erasmus University Rotterdam (EUR), Erasmus School of Law, Rotterdam Institute of Law and Economics, Students ( email )

Burgemeester Oudlaan 50
PO Box 1738
Rotterdam
Netherlands

Universität Osnabrück - Faculty of Law

Osnabruck, D-49069
Germany

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