Is Predistribution Superior to Redistribution? 

Abstract

I examine the roots of a recent move away from the postwar social democratic consensus on a predominant role for post-market tax and transfer redistribution, towards transforming the premarket distribution of income earning capabilities (predistribution). This shift from redistribution to predistribution is underpinned by arguments highlighting (i) incentive costs of redistribution, (ii) the greater moral legitimacy of predistribution and (iii) political economy preference for predistribution. These arguments need to be examined closely on conceptual, empirical and policy grounds and, when this is done, I believe that the case for robust redistribution remains as strong as ever.

Keywords: Redistribution, Predistribution, Optimal tax theory, Equality of Opportunity

JEL Classification: D31, D63, H20, H23, H53, I31