Working Paper: CEPR ID: DP13773
Authors: Rupert Sausgruber; Axel Sonntag; Jean-Robert Tyran
Abstract: We experimentally study the disincentive effect of taxing work and redistributing tax revenues when redistribution is imposed vs. democraticallychosen in a vote. We find a “dividend of democracy” in the sense that the disincentive effect is substantially smaller when redistribution is chosen in a vote than when it is imposed. Redistribution seems to be more legitimate, and hence less demotivating, when accepted in a vote.
Keywords: redistribution; disincentive effect; voting; legitimacy; real effort task; lab experiment
JEL Codes: C92; D31; D72; H23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| democratic choice (D72) | reduction in disincentive effects (H31) |
| redistribution chosen by vote (endo) (D72) | smaller disincentive effects (H31) |
| redistribution imposed (exo) (H23) | larger disincentive effects (H31) |
| democratic choice (D72) | higher tax revenues (H29) |
| legitimacy of voting process (K16) | reduction in disincentive effects (H31) |