Inequality, Redistribution, and the Individualism-Collectivism Dimension of Culture

38 Pages Posted: 23 Jan 2017 Last revised: 4 Oct 2017

See all articles by Carola Binder

Carola Binder

Haverford College - Department of Economics

Date Written: January 19, 2017

Abstract

This paper examines the relationship between culture and redistribution, focusing on the individualism-collectivism dimension of culture. Perhaps surprisingly, countries with more individualistic cultures have significantly greater income redistribution and lower levels of after-tax income inequality. This finding also holds when using instruments for individualism suggested by the literature on cross-cultural psychology, including historical pathogen prevalence and linguistic and genetic characteristics, to address reverse causality, and is driven by higher-income countries. In higher income countries, individualism is positively correlated with generalized trust and tolerance of outsiders and negatively correlated with belief in traditional gender roles. In contrast, in lower income countries, individualism is associated with a stronger emphasis on self-reliance and the benefits of competition.

Keywords: Inequality, Redistribution, Culture, Individualism, Collectivism, Social Norms, Values

JEL Classification: D30, D31, D63, Z10, O15

Suggested Citation

Binder, Carola, Inequality, Redistribution, and the Individualism-Collectivism Dimension of Culture (January 19, 2017). Available at SSRN: https://ssrn.com/abstract=2891781 or http://dx.doi.org/10.2139/ssrn.2891781

Carola Binder (Contact Author)

Haverford College - Department of Economics ( email )

Haverford, PA 19041
United States

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