Disincentives from Redistribution: Evidence on a Dividend of Democracy

54 Pages Posted: 11 Jun 2019

See all articles by Rupert Sausgruber

Rupert Sausgruber

Vienna University of Economics and Business - Department of Economics

Axel Sonntag

Vienna Center for Experimental Economics; Institute for Advanced Studies (IHS)

Jean-Robert Tyran

University of Vienna; University of Copenhagen - Department of Economics; Centre for Economic Policy Research (CEPR)

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Date Written: June 2019

Abstract

We experimentally study the disincentive effect of taxing work and redistributing tax revenues when redistribution is imposed vs. democratically chosen in a vote. We find a "dividend of democracy" in the sense that the disincentive effect is substantially smaller when redistribution is chosen in a vote than when it is imposed. Redistribution seems to be more legitimate, and hence less demotivating, when accepted in a vote.

Keywords: disincentive effect, Lab Experiment, Legitimacy, Real effort task, redistribution, voting

JEL Classification: C92, D31, D72, H23

Suggested Citation

Sausgruber, Rupert and Sonntag, Axel and Tyran, Jean-Robert, Disincentives from Redistribution: Evidence on a Dividend of Democracy (June 2019). CEPR Discussion Paper No. DP13773. Available at SSRN: https://ssrn.com/abstract=3401860

Rupert Sausgruber (Contact Author)

Vienna University of Economics and Business - Department of Economics ( email )

Welthandelsplatz 1
Vienna, 1020
Austria
+43 1 31336 4572 (Phone)

Axel Sonntag

Vienna Center for Experimental Economics ( email )

Oskar-Morgenstern-Platz 1
Vienna, Vienna 1090
Austria

HOME PAGE: http://axelsonntag.com

Institute for Advanced Studies (IHS) ( email )

Josefstädter Straße 39
1080 Vienna
Austria

HOME PAGE: http://insight-austria.ihs.ac.at

Jean-Robert Tyran

University of Vienna ( email )

Oskar-Morgenstern-Platz 1
Vienna, Vienna 1090
Austria

HOME PAGE: http://homepage.univie.ac.at/jean-robert.tyran/

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark
+45 353 23 027 (Phone)

HOME PAGE: http://www.econ.ku.dk/tyran/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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