Are People Inequality Averse, and Do They Prefer Redistribution by the State? A Revised Version

27 Pages Posted: 13 Jan 2004

See all articles by Johannes Schwarze

Johannes Schwarze

University of Bamberg; German Institute for Economic Research (DIW Berlin); IZA Institute of Labor Economics

Marco Härpfer

University of Bamberg

Date Written: December 2003

Abstract

We link life-satisfaction data to inequality of the pre- and post-government income distribution at the regional level, to estimate the degree of inequality aversion. Three different inequality measures are used. In addition, we investigate whether a reduction in inequality by the state increases individual well-being. We find only weak evidence that Germans are inequality averse. Inequality reduction by the state does not increase wellbeing. On the contrary, inequality reduction imposes an excess burden on middle-income earners. The paper uses data from the German Socio-economic Panel Study (GSOEP) from 1985 to 1998.

Keywords: inequality aversion, redistribution, life satisfaction, panel data

JEL Classification: C23, D31, D63, I31

Suggested Citation

Schwarze, Johannes and Härpfer, Marco, Are People Inequality Averse, and Do They Prefer Redistribution by the State? A Revised Version (December 2003). Available at SSRN: https://ssrn.com/abstract=487413

Johannes Schwarze (Contact Author)

University of Bamberg ( email )

Kirschaeckerstrasse 39
Bamberg 96045
Germany
+49 951 863 2600 (Phone)
+49 951 863 5569 (Fax)

German Institute for Economic Research (DIW Berlin)

Mohrenstraße 58
Berlin, 10117
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Marco Härpfer

University of Bamberg ( email )

Kirschaeckerstrasse 39
Bamberg 96045
Germany

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