The Tradeoff between Redistribution and Effort: Evidence from the Field and from the Lab
36 Pages Posted: 7 May 2012
Date Written: April 30, 2012
Building on a theoretical model we test the hypothesis that effort choices and preferences for redistribution are simultaneously determined. Using cross-country panel data from the World Value Survey, we find that it is important to model preferences for redistribution and effort choices simultaneously. While respondents with stronger preferences for redistribution tend to have smaller incentives to engage in effort, the reverse does not hold true. Using a lab experiment, we show that redistribution choices even increase in imposed effort. Those with higher ability are willing to help the needy if earning income becomes more difficult for everybody.
Keywords: effort, redistribution, World Value Survey, simultaneous equation models, experiment
JEL Classification: C310, C910, D310, J280
Suggested Citation: Suggested Citation