Working Paper: NBER ID: w15587
Authors: Alberto F. Alesina; Guido Cozzi; Noemi Mantovan
Abstract: Ideas about what is "fair" above and beyond the individual's position in the income ladder influence preferences for redistribution. We study the dynamic evolution of different economies in which redistributive policies, perceptions of fairness, inequality and growth are jointly determined. We show how including fairness explains various observed correlations between inequality, redistribution and growth. We also show how different beliefs about fairness can keep two otherwise identical countries in different development paths for a very long time.
Keywords: fairness; redistribution; inequality; political economy
JEL Codes: H0; H1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| initial beliefs about fairness (D63) | long-term evolution of redistributive policies (H23) |
| perceptions of fairness (D63) | divergent policies over time (F68) |
| shocks to wealth inequality (D31) | varying policy responses (E65) |
| higher inequality perceived as fair (D63) | less redistribution (D39) |
| initial beliefs about fairness (D63) | differing tax rates (H29) |
| perceptions of fairness (D63) | distinct inequality and growth trajectories (O49) |