Intergenerational Earnings Mobility and Preferences for Redistribution

34 Pages Posted: 8 Dec 2012

See all articles by Thomas Siedler

Thomas Siedler

University of Hamburg - Faculty of Business, Economics, and Social Sciences; DIW Berlin; Institute for the Study of Labor (IZA); University of Essex

Bettina Sonnenberg

German Institute for Economic Research (DIW Berlin)

Date Written: November 1, 2012

Abstract

This paper analyzes the extent to which intergenerational upward and downward mobility in earnings are related to individuals’ preferences for redistribution. A novel survey question from the German Socio-Economic Panel Study — whether the taxes paid by unskilled workers are too high, adequate or too low — are used to elicit attitudes toward redistribution. Intergenerational mobility with regard to long-term earnings is measured using a rich panel data spanning an observation window of 22 years. The results reveal that intergenerational mobility is significantly related to preferences for redistribution. The empirical results yield strong and robust support for Piketty’s (1995) rational-learning theory: individuals who experience upward (downward) intergenerational mobility are less (more) likely to favor redistribution taxation policies.

Keywords: preferences for redistribution, intergenerational mobility, long-run earnings, panel data

JEL Classification: J62, H23

Suggested Citation

Siedler, Thomas and Sonnenberg, Bettina, Intergenerational Earnings Mobility and Preferences for Redistribution (November 1, 2012). SOEPpaper No. 510. Available at SSRN: https://ssrn.com/abstract=2186466 or http://dx.doi.org/10.2139/ssrn.2186466

Thomas Siedler (Contact Author)

University of Hamburg - Faculty of Business, Economics, and Social Sciences ( email )

Von-Melle-Park 9
Hamburg, 20146
Germany

DIW Berlin ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Bettina Sonnenberg

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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