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Intellectually interesting paper

The AER Sept 2005
Fairness and Redistribution

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 redistributivep olicies. (JEL D31, E62, H2, P16)

juuni 29, 2011 - Posted by | Uncategorized

1 kommentaar »

  1. General! – obwieściła Alva triumfalnie, mało co bild
    presse podawała format wygranej na loterii, trzepocąc a tak swoją drogą rękoma.

    Fenton uśmiechnął się, pozostawiając inicjatywę Kelly’emu.
    Jakkolwiek by było czekal.

    Kommentaar kirjutas Alva | aprill 13, 2013 | Vasta

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