Fairness and redistribution

By A. Alesina, George-Marios Angeletos. 2005

1,375 citations recorded by the source corpus.

Different beliefs about the fairness of social competition and what determines income inequality influence the redistributive policy chosen in a society. But the composition of income in equilibrium depends on tax policies. We show how the interaction between social beliefs and welfare policies may lead to multiple equilibria or multiple steady states. If a society believes that individual effort determines income, and that all have a right to enjoy the fruits of their effort, it will choose low redistribution and low taxes. In equilibrium, effort will be high and the role of luck will be limited, in which case market outcomes will be relatively fair and social beliefs will be self-fulfilled. If, instead, a society believes that luck, birth, connections, and/or corruption determine wealth, it will levy high taxes, thus distorting allocations and making these beliefs self-sustained as well. These insights may help explain the cross-country variation in perceptions about income inequality and choices of redistributive policies.

Subfields: Economics and Econometrics, Gender Studies

View Paper: https://www.semanticscholar.org/paper/33a9dd342e582326188ef94a65cf569989613f60

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Citations in the corpus

Immigration and Redistribution (2018, neutral): “34Alesina and Angeletos (2005) provide a model in which the perception of effort put in by the beneficiaries of redistribution is a crucial determinant of citizens’ views about the welfare state.”
Policies for a more Dematerialized EU Economy. Theoretical Underpinnings, Political Context and Expected Feasibility (2016, background): “The general public can be induced either to support or to oppose a given policy, and public support is an important determinant of feasibility [81–83].”
“Fair” Inequality? Attitudes toward Pay Differentials: The United States in Comparative Perspective (2006, background): “2 In the economics literature, Alesina and Angeletos (2005), Alesina, Di Tella, and MacCulloch (2001), Alesina and La Ferrara (2001), Bénabou and Tirole (forthcoming), Glaeser (2005), and Piketty Wegener (1995a), and Wilensky (2002) are among those who have argued the alternative hypothesis: that…”
Preferences for redistribution: an empirical analysis over 33 countries (2011, methodology): “The first two ideal types, based on model [1], represent a manager (Type 1) versus an elementary worker (Type 2).”
Family Values and the Regulation of Labor (2015, neutral): “U R = (1−R)max[w +Δ(σ), 1− c−Δ(σ)] +Rmax[Δ(σ), 1− c−Δ(σ)] (4)”
The Altruistic Rich? Inequality and Other-Regarding Preferences for Redistribution (2017, methodology): “Neither the “referencedependent inequity aversion” preferences proposed by Fehr and Schmidt (1999) nor the “fairness” preferences in Alesina and Angeletos (2005) seem to apply to the demand for redistribution in the US.”
Is the Welfare State Sustainable? Experimental Evidence on Citizens' Preferences for Redistribution (2010, neutral): “1 General Determinants of the Demand for Income Redistribution In their reviews, Alesina and Giuliano (2009) and Akkoyunlu et al.”
Learning the Wealth of Nations (2008, background): “Our model also predicts that there would be a substantial reversal to protectionism if nowadays the world was hit by a shock of the size of the Great Depression.”
Cutthroat Capitalism versus Cuddly Socialism: Are Americans More Meritocratic and Efficiency-Seeking than Scandinavians? (2020, neutral): “…social equilibria with different self-sustained beliefs, where income inequality in the United States to a larger extent than in Scandinavia is believed to be the result of differences in individual productivity rather than luck (Piketty 1995; Alesina and Angeletos 2005; Bénabou and Tirole 2006).”