Fairness and Redistribution

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Fairness and Redistribution

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dc.contributor.author Angeletos, George-Marios
dc.contributor.author Alesina, Alberto
dc.date.accessioned 2010-11-09T19:26:19Z
dc.date.issued 2005
dc.identifier.citation Alesina, Alberto, and George-Marios Angeletos. 2005. Fairness and redistribution. American Economic Review 95(4): 960-980. en_US
dc.identifier.issn 0002-8282 en_US
dc.identifier.uri http://nrs.harvard.edu/urn-3:HUL.InstRepos:4553009
dc.description.abstract 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. en_US
dc.description.sponsorship Economics en_US
dc.language.iso en_US en_US
dc.publisher American Economic Association en_US
dc.relation.isversionof doi:10.1257/0002828054825655 en_US
dash.license LAA
dc.title Fairness and Redistribution en_US
dc.type Journal Article en_US
dc.description.version Author's Original en_US
dc.relation.journal American Economic Review en_US
dash.depositing.author Alesina, Alberto
dc.date.available 2010-11-09T19:26:19Z

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  • FAS Scholarly Articles [7495]
    Peer reviewed scholarly articles from the Faculty of Arts and Sciences of Harvard University

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