Redistributive Policies Research Articles

Social policy, public investment or the environment? Exploring variation in individual-level preferences on long-term policies

This article studies individual-level attitudes towards long-term investment policies using novel survey data for the case of Germany. Building on a budding literature on the relationship between environmental and social policy attitudes, our first contribution to research is to show that citizens, when prompted to think about their support for long-term investment policies, support welfare state related policies such as investments in education and pensions to a greater degree than non-welfare state issues such as public infrastructure investment or renewable energy. Citizens are most supportive of using present-day redistributive policies – in our case: increasing income taxes on the rich – in order to finance long-term investment. We also find evidence that political trust is positively associated with support for long-term investment policies, but in particular investments in education and renewables. Furthermore, our analysis reveals the importance of individual political ideology. These findings have implications for public demand for tackling the long-term issues faced by society today.

Improving the design of cash transfers to reduce the regressive effects of a carbon tax in Latin American countries - a look at territorial heterogeneity

ABSTRACT The distributional effect of carbon pricing jeopardizes its public acceptability in developed and developing countries. Previous research has shown that cash transfers to poor households or targeted subsidies can correct the incidence of carbon pricing on different income groups. However, there has been no in-depth analysis of the territorial heterogeneity of the impacts or how redistributive policies could consider this element in their design. This study addresses this gap in the literature through a microsimulation approach for nine Latin American countries. We find that a carbon tax not only generates regressive effects on household expenditure but that there are also some regions within countries whose populations could be severely affected, exacerbating pre-existing inequalities. The previous is not solved with cash transfers based exclusively on income level criteria. Consequently, a mechanism is proposed to adjust targeted cash transfers according to regional differences, showing that it would contribute to territorial equity.

How do right‐wing populist majoritarian governments redistribute? Evidence from Poland, 2005–2019

AbstractThere is scarce evidence regarding redistribution policies implemented by right‐wing populist parties forming majority governments. We contribute to this literature by measuring the effects of sweeping reforms of the tax and benefit system carried out by the populist party PiS governing Poland since 2015. The reforms included a generous, unconditional, and universal child benefit. Using micro‐simulation‐based decompositions of relative poverty, we separate poverty changes due to the populists' policies (policy effects) from observed poverty changes. We found that populists' reforms from 2015 to 2019 had large poverty‐reducing effects: total poverty was brought down by more than 2 percentage points, while child poverty by about 6.5 points. However, the policy effects account ‘only’ for about half of overall poverty declines over this period. On the other hand, they are much bigger than those obtained previously by a coalition of mainstream parties (2007–2011) or a coalition of populist ones (2005–2007). Since 2015, the populists' reforms targeted social groups that were neglected or inadequately addressed by anti‐poverty policies by past governments. Our results suggest that, at least in conservative and ethnically homogeneous societies, right‐wing populist majoritarian governments are capable of carrying out large‐scale redistribution projects that lead to sizeable poverty reductions and include non‐chauvinist, universal cash transfers.

Perceived position on the social ladder and redistributive preferences – A survey experiment from the Kyrgyz Republic

Prior research has established that both perceived and actual inequality matter for redistributive preferences. Hence, misconceptions can alter public demand for government intervention. Survey experiments have found systematic biases in people's inequality perceptions and found that, in some contexts, the provision of correct information may alter their preferences for redistribution. This literature has, however, centered around high-income, Western nations. This paper uses an experimental survey design to understand the effect of perceived poverty and inequality on the preferences for redistribution in the Kyrgyz Republic. Using primary survey data collected from 2000 households, we first analyze the attitudes of different socio-economic groups towards the poor and the extent to which attitudes predict preferences for redistributive policies. Secondly, we focus on how the perceived socio-economic position influences support for redistribution. Finally, using an experimental survey design, we estimate the effect of correcting misconceptions about individuals' socio-economic position on the support for redistribution. We find that the relationships between poverty attitudes and demand for government redistribution is similar to a high-income, Western context. Overall, demand for redistribution remains robust to new information about the position in the income distribution. The correction of biased perceptions only altered stated preferences for people with specific already-held beliefs.

Per un’analisi critica del tema della corruzione nella corrente dominante gli studi sullo sviluppo: percorsi teorici e riflessioni dai territori marginali dell’Odisha (India)

The rise and consolidation of neoliberalism witnessed, inter alia, the emergence of a discourse on the causes of poverty centred on public corruption, which has informed the mainstream of development. In this perspective, the goal of “long-term economic growth and shared prosperity” has to be achieved – parallel to the implementation of core economic reforms – by combating corruption. As a matter of fact, governments of developing countries are called upon to fight corruption, under the watchful eye of a civil society, which is presumed not to question the framework of neoliberal reforms. Here, we would like to propose a critical reading of this normative framework by questioning, in a historical perspective, the main theoretical assumptions underlying it as well as the notion of corruption, which informs it. Not least, we will raise the question of which spaces, if any, are left to take into consideration the role to be played by redistributive public policies in the struggle against poverty in the world’s South. Finally, we will propose some reflections resulting from a long period of fieldwork research in the Indian state of Odisha, historically plagued by severe levels of material poverty and social inequality, and affected by the proliferation of corruption practices inherent to the exploitation of its abundant natural resources.

Nexus between inflation, income inequality, and economic growth in Ethiopia.

The relationship between inflation, income inequality, and economic growth is a subject of intense debate among economic researchers and policymakers. This study aims to analyze this relationship in Ethiopia using advanced statistical techniques such as VEC (vector error correction) model with Granger causality, and Johansen's cointegrated. The study covers the period from 1980 to 2022 and includes pre and post-estimation diagnosis tests to ensure the accuracy of the model. The results indicate the presence of a long-run relationship among inflation, income inequality, and economic growth, as confirmed by Johansen's cointegrated test. Additionally, the vector error correction model shows a strong long-run relationship between economic growth, income inequality, and inflation. In the short run, there is a significant association between income inequality and economic growth, as well as between inflation and economic growth. The Granger causality test reveals a bidirectional causality between economic growth and income inequality and between economic growth and inflation. However, there is a unidirectional causality from inflation to income inequality. Based on these findings, it is suggested that the government should implement various strategies and policies, including redistribution policies, social safety nets, promoting inclusive economic growth, coordinating effective monetary and fiscal policies, implementing progressive taxation, and reforming the labor market.

Do corruption, income inequality and redistribution hasten transition towards (non)renewable energy economy?

This study examines the impact of corruption, income inequality, and redistribution on energy consumption (renewable, nonrenewable, and total) in 166 countries. Panel data and the two-step dynamic system-generalized method of moments techniques are utilised. Our findings show that net (post-tax/transfer Gini index) and market (pre-tax/transfer Gini index) income inequality reduce total energy and renewable energy consumption while increasing nonrenewable energy consumption. The results indicate that income redistribution drives total energy and renewable energy consumption while decreasing nonrenewable energy use. The study highlights that control of corruption increases total energy, renewable, and nonrenewable energy consumption. Moderation and marginal effect analysis suggest that when control of corruption increases, income inequality increases total energy, nonrenewable, and renewable energy consumption. Again, when corruption is effectively controlled, income redistribution increases renewable energy consumption while reducing nonrenewable energy consumption. These findings differ amongst regions. Following these findings, we recommend that policymakers should focus on reducing corruption and addressing income inequality through redistribution policies to accelerate the transition towards a renewable energy economy.

Validity of the Meltzer and Richard hypothesis under captured democracy and policy regime hypotheses

The well-known Meltzer and Richard (1981) hypothesis proposes that median voters are more likely to support redistribution policies that reduce income inequality when the gap between pre-tax income and mean income increases. Despite the academic influence this hypothesis has had, empirical studies demonstrate that the relationships between democracy, redistribution, and inequality are far more complex than Meltzer and Richard assume. Based on previous theoretical research, this study proposes two hypotheses to explain why the equalization effects of democracy may not work: the captured democracy hypothesis and the policy regime hypothesis. Empirical testing with data for 164 countries between 1990 and 2018 suggests the following results. First, the degree of redistribution of democratic countries is much higher than that of nondemocratic countries. However, the variability of income redistribution in democratic countries is higher than that of non-democratic countries. Second, the estimation results do not support the Meltzer and Richard hypothesis for any of three democracy-related indices. This implies that democracy itself is not a sufficient precondition for redistribution. Third, the empirical tests of the two hypotheses on democratic countries support that the equalizing effects of democracy are weaker in societies where political influence depends on socioeconomic position and in societies where neoliberal policies are dominant.

Inequality and redistribution: evidence from Scandinavian and Mediterranean countries

Purpose The purpose of this paper is to investigate the adjustment of government redistributive policies in Scandinavian and Mediterranean countries following changes in income inequality over the period 1980–2021. Design/methodology/approach The authors first modelled the time-varying dynamics between income inequality and redistribution and then used a non-linear framework to test for the existence of asymmetries and cointegration in their long-run relationship. The authors used two complementary measures of inequality – the share of total income accruing to top percentile income holders and the ratio of the share of total income accruing to top decile income holders divided by that accumulated by the bottom 50% – and computed redistribution as the difference between the two inequality indicators before and after taxes and transfers. Findings The authors found that the sign of the relationship between income inequality and redistribution is mostly positive and time-varying. Overall, the authors also found evidence that the impact of increases in inequality on redistributive measures is higher than that of decreases. Finally, the authors obtained a significant long-run relationship between both variables in all countries except Denmark and Spain. These results hold for both Scandinavian and Mediterranean countries. Originality/value To the best of the authors’ knowledge, this is the first paper to account for the potential existence of non-linearities and to examine the asymmetries in the adjustment of redistributive policies to increases in income inequality using alternative income inequality metrics.

A dynamic partial equilibrium model of capital gains taxation

We analyze a multi-period model of capital gains taxation with endogenous prices. Relative to an economy without taxation, a capital gains tax tends to lower prices and increase returns. Abstracting from tax redistribution policies, we find that a taxable investor's welfare falls, a nontaxable investor's welfare rises, and, depending on the tax rate, social welfare may either rise or fall. The taxable investor's tax-timing option increases social welfare but may either increase or decrease tax revenue. Tax rebates for capital losses have little effect on welfare or tax revenue. Implications for empirical asset pricing are identified.

The environmental sustainable development goals and economic growth: an empirical investigation of selected SAARC countries.

Environmental SDGs, or Sustainable Development Goals, are a set of targets outlined by the United Nations to address the most pressing environmental issues of our time. These goals aim to promote sustainable development by addressing issues such as climate change, biodiversity loss, and pollution. By achieving these goals, we can safeguard the planet's resources for future generations while improving the quality of life for people around the world. This research investigates the effect of environmental SDGs on economic growth (GDPGRO) at the disaggregated level, with two dimensions: economic and social goals. Using panel data from selected SAARC countries between 2000 and 2020, we employ a panel ARDL (PMG) technique. The finding of this study shows that increasing access to SDG 7 (affordable and clean energy), SDG 13 (climate action), and SSDGs (social Sustainable Development Goals) is negatively associated with potential decreases in economic growth which can occur in several ways, such as increased government spending and taxes, redistributive policies, and regulations that increase costs for businesses. Promoting SDG 11 (sustainable cities and communities) and SDG 12 (responsible consumption and production) can lead to long-term economic growth. SDG 15 (life below water) and ESDGs (economic Sustainable Development Goals) have a positive relationship with economic growth by conserving and sustainably using terrestrial ecosystems that can contribute to economic growth in the long term. ESDGs lead to increased income, improved living standards, and reduced poverty and inequality. Policies should prioritize disaster risk mitigation, align climate change goals with sustainable development goals, and promote sustainable production and consumption. This can be achieved by incentivizing cleaner energy sources and sustainable cities. To balance economic growth with sustainability, policies should encourage responsible business practices and sustainable industries.

Social preferences, support for redistribution, and attitudes towards vulnerable groups

In this work, I explore the explanatory power of experimentally-elicited social preferences over self-reported support for redistribution. Social preferences are obtained by means of a simplified dictator game embedded in an online survey that also includes a questionnaire on preferences for redistribution, beliefs, inequality perceptions, and ideological positioning. I find that social preferences covary strongly with self-reported support for increased taxation. Besides, more generous social preference types are more likely to have favourable views towards specific welfare beneficiaries, especially those usually regarded as less deserving, such as migrants, the unemployed, or the poor. Some elements that correlate negatively with preferences for redistribution are being older than 65, having a right-wing ideology, believing that personal effort is the main driver of one’s economic position, and distrusting others; while being a parent or perceiving high inequality have the opposite effect. Social preferences help thus further understand public support for redistribution and the political feasibility of redistributive policies.

Long-term economic implications of Demeny voting: A theoretical analysis

Despite the intense debate over possible correctives to the propensity of contemporary democracies experiencing population aging to favor the elderly, a formal analysis of the long-term economic implications of introducing such correctives is lacking. This paper bridges the gap by modeling intergenerational redistribution policies by the government through a simple overlapping-generations framework with endogenous fertility. An original feature of our model is that the government policy rule is also endogenized because the weight assigned by the government to the well-being of each living cohort in its objective function changes with both the demographic composition of the voting population and the possibility for young adults to exercise their minor children’s voting rights (called Demeny voting). Within this setup, we study the long-term effects of the introduction of Demeny voting on population growth, capital accumulation, output and consumption per capita, and individuals’ lifetime well-being.

Support for unconditional basic income in Spain: A materialist or post‐materialist issue?

AbstractUnconditional basic income (UBI) is a redistributive policy proposal that is receiving increasing attention in the Spanish political sphere. Welfare attitudes literature has shown that support for UBI is higher among left‐wing citizens and those of lower socioeconomic status. However, previous studies have not addressed the mediating role of ideological values such as egalitarianism or meritocratism in supporting UBI. Furthermore, studies have not considered the interactive relationship between ideological and self‐interest motives when studying attitudes toward UBI. Drawing on modernization theory, we propose that individuals' socioeconomic status conditions the role of ideological motivations in shaping support for UBI. To test this hypothesis, we study data from two different surveys conducted in Spain in 2017 (N = 1958) and 2021 (N = 2004). Our findings suggest that ideology is a less relevant motivation for supporting UBI among the Spanish citizens of lower socioeconomic status, but it becomes increasingly salient among higher‐status citizens. Among the latter, egalitarian values lead leftists to support UBI, whereas anti‐egalitarian and meritocratic values lead rightists to anti‐UBI positions. We discuss these findings within the framework of modernization theory, addressing support for UBI by different social groups and the ability of this policy proposal to elicit broad‐based support.

Politicization of redistributive policies and political behavior of the poor in German elections

The socio-economic gradient in political participation is a growing concern in Germany and many other democracies. We investigate whether campaigns that politicize socio-economic conflicts can mobilize the poor to become more politically active. Using a mixed-methods design that draws on party manifestos, election surveys, and focus group discussions, we show that the 2021 election followed a trend of re-positioning of the SPD, shifting their focus again towards redistributive issues. However, these changes were only partly perceived by citizens on the micro level. While greater politicization of socio-economic issues was followed by greater political involvement of the poor in recent elections, the SPD could not capitalize much on that development. Our qualitative findings indicate that the poor paid little attention to the SPD campaign discourse outside the minimum wage issue. Furthermore, it becomes obvious that the SPD faces a greater credibility problem among its former electorate.

Unions and moral economies: An investigation into cultural pathways linking union decline to rising income inequality, 1983–2018

Declines in union density explain a considerable portion of rising US inequality among unionized and non-unionized workers. However, how union density regulates non-union wages is mainly speculative. I test the moral economy hypothesis that union density reduces inequality, in part, by fostering egalitarian wage norms that regulate compensation practices and redistributive policies. Variance function regressions suggest that wage norms may explain 12% of union density decline effects on rising within-group wage inequality between 1983 and 2018. Findings provide support for the moral economy perspective and an empirical foundation for the causal relationship between unions and inequality.

Climate Crisis and Social Protection - From Worker Protection to Post-growth Transformation?

The article discusses five literature strands’ approaches towards social protection systems in the context of climate crisis: Adaptive Social Protection, Just Transition, Green New Deal, Post-growth, and Eco-feminism. As we argue, these five strands are located on a spectrum between a green growth orientation and a green anti-capitalist orientation. Furthermore, they differ in terms of their problematisation of the climate crisis and have different perspectives on relevant actors, on world regions, and – most relevant in the context of social welfare – their conceptualisation of social protection. While Adaptive Social Protection emphasizes cash transfers and insurances, Green New Deal and Just Transition approaches focus more on redistribution and labour market policies, and Post-growth and Eco-feminist approaches more on universalist policies and systems. We argue that these literatures each have their weaknesses, but also offer urgent questions, concepts, and insights for further social policy research.

Cooperativism in a Dirigiste State: SEKE and the Reconstruction of Greece’s Tobacco Sector (1947–1967)

Abstract: The Co-operative Union of Tobacco Producers of Greece (SEKE) made a series of key contributions to the reconstruction, and development, of Greek tobacco production and exports in the postwar period. Its strategies allowed tobacco growers to retain a larger part of the value that they produced. A historical analysis of SEKE’s emergence and early trajectory allows a complex narrative of the postwar economic reconstruction to emerge, one in which we can appreciate the role of sub-state actors more clearly than has been the case thus far. By influencing the institutional framework regulating the tobacco sector, opening up new export markets, and investing in human capital, SEKE partially actualized the agrarian political program of the interwar period. As a large trading firm owned by agricultural cooperatives, SEKE’s history forces us to revise the limited, often cynical view of Greek agrarian cooperativism as a mere mechanism for the enforcement of redistributive state policy and the management of credit from the Agricultural Bank.

Kicking the Ladder or Not? Unraveling Income Inequality Perceptions in the World

This research aims to explore the factors influencing support for income equality at both the individual and macro levels worldwide. By analyzing the latest data from the World Values Survey, which includes responses from 50,615 individuals across 42 countries, and incorporating key macroeconomic variables obtained from the World Bank, this study identifies several crucial determinants of attitudes towards addressing income inequality using logistic regression analysis. The research findings reveal that factors such as material well-being, life satisfaction, institutional trust, job status, place of residence, level of education, and religiosity play a significant role in shaping individual perceptions of income inequality, particularly in the context of support for either support for redistributive policy or free-market capitalism as potential solutions to mitigate income disparities. Additionally, macro-level variables reveal a substantial influence on support for income equality. Income per capita, income share of the top 10, the unemployment rate, and women's representation in parliament as a proxy for gender equality are found to significantly increase the likelihood of endorsing efforts to reduce income inequality. Our results remain robust when controlling for alternative income-related variables.

Mindsets of poverty: Implications for redistributive policy support

AbstractBelief systems impact poverty reduction efforts, as they can enhance, or diminish, support for redistributive economic policies. We examined the predictive utility of mindsets about the changeability (growth mindsets) or the stability (fixed mindsets) of the nature of poverty in society. We conducted six studies, two pre‐registered, using both cross‐sectional (N = 763) and experimental methods (N = 1361). Growth mindsets of poverty in society predicted greater support for redistributive policies, in part through decreased blame, although there was also a small but unreliable negative indirect effect through social class essentialism. The three experimental studies, each using a different approach, were successful in manipulating mindsets of poverty. However, only the approach leveraging system justifying beliefs had implications for blame, essentialist beliefs, and indirect consequences for policy support. We discuss potential implications of this work for leveraging multiple belief systems to optimally promote support for policies designed to abolish poverty.