Disincentives from Redistribution: Evidence on a Dividend of Democracy
52 Pages Posted: 28 Oct 2019
Date Written: May 31, 2019
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: redistribution, disincentive effect, voting, legitimacy, real-effort task, lab experiment
JEL Classification: C92, D31, D72, H23
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