Class Altruism and Redistribution

31 Pages Posted: 11 Feb 2021

See all articles by Christian Ghiglino

Christian Ghiglino

University of Essex - Department of Economics

David Juárez-Luna

Universidad Anáhuac México-Norte

Andreas Müller

University of Essex, Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 2021

Abstract

Why do tax rates vary so much across countries? We study the role of other-regarding preferences and ethnic fragmentation in redistribution. The government of a two-party democracy is elected by altruistic voters and decides on a redistributive income tax. Social identification directs voters' altruism toward specific social groups. We identify three main factors that lead to low levels of redistribution in the political equilibrium: (i) strong in-group altruism of the rich voters---which we refer to as class altruism; (ii) weak universal altruism among all voters---in particular the rich; and (iii) ethnic fragmentation among poor voters. Using survey data, we document evidence on the pattern of altruism in the United States and the European Union and find that our model predictions are consistent with the observed differences in tax rates.

JEL Classification: D64, D71, D72, H20

Suggested Citation

Ghiglino, Christian and Juárez-Luna, David and Müller, Andreas, Class Altruism and Redistribution (February 2021). CEPR Discussion Paper No. DP15793, Available at SSRN: https://ssrn.com/abstract=3784032

Christian Ghiglino (Contact Author)

University of Essex - Department of Economics ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

David Juárez-Luna

Universidad Anáhuac México-Norte ( email )

Av. Universidad Anáhuac 46
Col. Lomas Anáhuac
Huixquilucan, Estado de México 52786
Mexico
56270210 (Phone)

HOME PAGE: http://https://www.anahuac.mx/mexico/EscuelasyFacultades/economia/Profesorado/David-Juarez-Luna

Andreas Müller

University of Essex, Department of Economics ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

HOME PAGE: http://https://www.essex.ac.uk/people/mulle41103/andreas-mueller

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
196
PlumX Metrics