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

40 Pages Posted: 16 Dec 2019

See all articles by Dietmar Fehr

Dietmar Fehr

Heidelberg University - Alfred Weber Institute for Economics

Johanna Mollerstrom

George Mason 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: December 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.

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Suggested Citation

Fehr, Dietmar and Mollerstrom, Johanna and Perez-Truglia, Ricardo, Your Place in the World: The Demand for National and Global Redistribution (December 2019). NBER Working Paper No. w26555, Available at SSRN: https://ssrn.com/abstract=3504440

Dietmar Fehr (Contact Author)

Heidelberg University - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

Johanna Mollerstrom

George Mason University ( email )

4400 University Drive
Fairfax, VA 22030
United States

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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