Income Inequality and Social Preferences for Redistribution and 1 Compensation Differentials

Abstract

4 Countries with greater inequality typically exhibit less support for redistribution and greater 5 acceptance of inequality (e.g., US versus Western Europe). If individual nations evolve along this 6 pattern, a vicious cycle could form with reduced social concern amplifying primal increases in 7 inequality. Exploring movements around these long-term levels, however, this study finds mixed 8 evidence regarding the vicious cycle hypothesis. Larger compensation differentials are accepted 9 as inequality grows. Weighing against this, growth in inequality is met with greater support for 10 government-led redistribution. Inequality shocks can be reinforced in the labor market but do not 11 result in weaker political preferences for redistribution. 12

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Cite this paper

@inproceedings{Kerr2014IncomeIA, title={Income Inequality and Social Preferences for Redistribution and 1 Compensation Differentials}, author={William R. Kerr and Byron F. Lutz and Rohini Prabha Pande and Thomas Piketty}, year={2014} }