SSE/EFI Working Paper Series in Economics and Finance
Identity and Redistribution
() and Robert Ístling
Abstract: This paper models the interaction between individuals'
identity choices and redistribution. Both redistributive policies and
identity choices are endogenous, and there might be multiple equilibria.
The model is applied to ethnicity and social class. In an equilibrium with
high taxes, the poor identify as poor and favor high taxes. In an
equilibrium with low taxes, at least some of the poor identify with their
ethnic group and favor low taxes. The model has two main predictions.
First, redistribution is highest when society is ethnically homogenous, but
the effect of ethnic diversity on redistribution is not necessarily
monotonic. Second, when income inequality is low, an increase in income
inequality might induce the poor to identify with their ethnic group and
therefore favor lower taxes.
Keywords: Redistribution; social identity; income inequality; ethnic fractionalization; ethnic diversity; social class; (follow links to similar papers)
JEL-Codes: H20; J15; (follow links to similar papers)
55 pages, December 19, 2006, Revised August 28, 2009
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Full text versions of the paper:
- This paper is forthcoming as:
Lindqvist, Erik and Robert Ístling, 'Identity and Redistribution', Public Choice.
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