Your Place in the World: The Demand for National and Global Redistribution

71 Pages Posted: 30 Dec 2019 Last revised: 18 May 2020

See all articles by Dietmar Fehr

Dietmar Fehr

Heidelberg University - Alfred Weber Institute for Economics

Johanna Mollerstrom

George Mason University - Department of Economics; Research Institute of Industrial Economics (IFN)

Ricardo Perez-Truglia

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

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Date Written: December 7, 2019

Abstract

Some of today’s most heated policy debates about Brexit, trade wars, climate change abatement, and migration involve redistribution of resources within a given country (national redistribution) and between countries (global redistribution). Nevertheless, theories and evidence on preferences for redistribution have focused almost exclusively on national redistribution. In this paper, we study preferences for global redistribution. The workhorse model in political economy predicts that individuals with incomes in the upper levels of the national income distribution are less supportive of national redistribution than those with incomes in the lower levels. Applied to the global arena, the model predicts that individuals who are richer in the global income distribution will be less supportive of global redistribution. We test this hypothesis using a two-year, face-to-face survey of a representative sample of German households. We show that respondents are misinformed about their positions in the national and global income distributions, and we provide novel evidence that those misperceptions are meaningful. Consistent with previous studies, we find support for the political economy model in the national arena: the correlational and experimental estimates indicate that the demand for national redistribution decreases with national relative income. However, the political economy model does not hold in the global arena: support for global redistribution does not depend on global relative income, but instead on national relative income.

Suggested Citation

Fehr, Dietmar and Mollerstrom, Johanna and Perez-Truglia, Ricardo, Your Place in the World: The Demand for National and Global Redistribution (December 7, 2019). GMU Working Paper in Economics No. 20-04, Available at SSRN: https://ssrn.com/abstract=3500138 or http://dx.doi.org/10.2139/ssrn.3500138

Dietmar Fehr

Heidelberg University - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

Johanna Mollerstrom

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

HOME PAGE: http://https://sites.google.com/site/johannamollerstrom/

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Ricardo Perez-Truglia (Contact Author)

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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