Sympathy for the Diligent and the Demand for Workfare

63 Pages Posted: 11 Aug 2017

See all articles by Andres Drenik

Andres Drenik

Columbia University

Ricardo Perez-Truglia

University of California, Berkeley; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: August 2017

Abstract

We study the role of fairness concerns in the demand for redistribution through workfare. In the first part of the paper, we present new evidence from a survey. We show that individuals are more generous towards poor people whom they perceive to be diligent workers relative to poor people whom they perceive to be non-diligent, a social preference that we label sympathy for the diligent. This preference is much stronger than preferences regarding other characteristics of the poor, such as race, nationality, and disability. More important, we show that subjects with higher sympathy for the diligent have a stronger preference for workfare programs. In the second part of the paper, we incorporate our empirical findings into a model of income redistribution. We consider the case of a benevolent government with fairness concerns that prioritizes the well-being of individuals who exert the most effort. We characterize the optimal conditions under which the government introduces work requirements. Even if wasteful, work requirements can be optimal, because they allow for a better distinction between individuals who exert great effort and individuals who do not. However, if the government lacks commitment power, the availability of screening through work requirements leads to a lower equilibrium effort and, possibly, a Pareto-dominated allocation.

Suggested Citation

Drenik, Andres and Perez-Truglia, Ricardo, Sympathy for the Diligent and the Demand for Workfare (August 2017). NBER Working Paper No. w23659, Available at SSRN: https://ssrn.com/abstract=3016930

Andres Drenik (Contact Author)

Columbia University ( email )

New York

Ricardo Perez-Truglia

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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