Redistribution: Politics, Law, and Policy

Thursday, May 12

12:00-12:55 p.m.   Lunch

12:55-1:00 p.m.     Welcome and Introduction

1:00-2:00 p.m.      Matthew Dimick and David Rueda “The Altruistic Rich?  Inequality and Other-Regarding Preferences for Redistribution.”

2:00-3:00 p.m.      Noam Lupu, “Class, Inequality, and Preferences for Redistribution in Argentina.”

3:00-4:00 p.m.      Susan Stokes, “Unemployment and Turnout.”

4:00-4:15 p.m.      Coffee break

4:15-5:15 p.m.       Jim Alt, “Contagious Political Concerns: Identifying Unemployment Concern Peer Effects Using the Danish Population Network.”

6:00 p.m.               Dinner (Buffalo Brew Pub)

Friday, May 13

9:00-10:00 a.m.     Isabela Mares, "Buying, Expropriating, and Stealing Votes."

10:00-11:00 a.m.    Jonas Pontusson, “Enlightenment and Solidarity:  National Union Movements, Distributive Norms, and the Union Effect on Support for Redistribution.”

11:00-11:15 a.m.     Coffee break.

11:15-12:15 p.m.     Pablo Beramendi and Melissa Zeigler Rogers, “Barriers to Egalitarianism:  Distributive Tensions in Latin American Federations.”

12:15-1:30 p.m.         Lunch.

1:30-2:30 p.m.          Alisha Holland, “Preferences over Redistribution and Forbearance.”

2:30-3:30 p.m.         Torben Iversen and Philipp Rehm, “The Market for Creampuffs:  Big Data and the Transformation of the Welfare State.”

3:30-4:00 p.m.         Coffee break.

4:00-5:00 p.m.         Lane Kenworthy, “Taxes and Redistribution.”

6:00 p.m.                   Dinner (800 Maple)

Saturday, May 14

9:00-10:00 a.m.      Monica Prasad, “The Consumer Economy and Redistribution.”

10:00-11:00 a.m.    Kenneth Scheve, “Origins of Wealth Equality.”

11:00-12:00 p.m.    David Rueda, “Preferences that Matter:  Inequality, Redistribution, and Voting in the US.”

12:00-1:15                 Lunch.

"Contagious political concerns: Identifying unemployment concern peer effects using the Danish population network."

Abstract: The identification of peer effects in politically-relevant contexts faces formidable empirical challenges. To identify how concerns about unemployment impact one's peers, we exploit an innovative design in an extraordinarily rich data environment. Using administrative data covering the entire Danish population over 37 consecutive years between 1985 and 2011, we are able to characterize a voter's social network according to familial, educational and vocational ties. Combining this network data with a panel political survey, we leverage unemployment shocks to friends of friends to identify unemployment concern peer effects. Our results provide evidence that increased peer unemployment concerns lead to an increase in an individual's unemployment concerns. This change can have important political implications.

"Barriers to Egalitarianism: Distributive Tensions in Latin American Federations"

Abstract: Latin America’s largest federations have significantly reduced their levels of income inequality in recent years, perhaps reflecting a structural change toward egalitarianism in these nations’ economic and political foundations. However, we argue that the political geography of federalism in Argentina, Brazil, and Mexico strongly shapes preferences against centralized redistribution likely to promote equity in the long term. While federalism does not necessary lead to lower redistribution in theory, the geographic spread of income, and malapportioned political institutions, limit egalitarianism in these nations. These dynamics help to explain why fiscal structures are distinct in Latin American federations versus federations in high-income countries. First, we show that the territorial structure of inequality and malapportionment are associated with lower redistributive effort in a global sample and that the Latin American federations have extreme values of both variables. Second, using a new dataset of income distributions within and across Argentina, Brazil, and Mexico’s regions over time, we demonstrate that the conditions that favor fiscal transfers from the national to sub-national governments are consistently strong but conditions are rarely favorable for centralized policies to equilibrate national income. Unequal income patterns are reinforced by legislative malapportionment, which encourages interregional transfers to regions and limits the political voice of the populated and unequal regions that would benefit from centralized redistribution.

“The Altruistic Rich? Inequality and Other-Regarding Preferences for Redistribution”

Abstract: What determines support among individuals for redistributive policies? Do indi- viduals care about others when they assess the consequences of redistribution? This paper proposes a model of other-regarding preferences for redistribution, which we term “income-dependent altruism.” Our model predicts that an individual’s preferred level of redistribution is decreasing in income, increasing in inequality, and, more importantly, that the inequality effect is increasing in income. Thus, even though the rich prefer less redistribution than the poor, the rich are more responsive, in a positive way, to changes in inequality than are the poor. We contrast these results with several other prominent alternatives of other-regarding behavior. Using data for the US from 1978 to 2010, we find significant support for our claims.

"Preferences over Redistribution and Forbearance"
Abstract: The intentional non-enforcement of laws, or forbearance, can be a way to redistribute resources. Under what circumstances do voters support forbearance? This chapter uses original survey and experimental data from Colombia, as well as surveys from across Latin America, to examine preferences toward redistribution by the state and informal redistribution through forbearance. I show, first, that income strongly predicts preferences for forbearance toward laws that benefit the poor (but not those that benefit rich, and less consistently for state redistribution), and second, that poor voters identify politicians who support forbearance as more likely to represent their interests, even compared to politicians who promise redistributive social expenditures. Combined, these findings suggest conventional models of redistributive preferences may be inappropriate for contexts where much downward redistribution happens by the state’s leave, rather than through the state’s hand.

"The market for creampuffs: Big Data and the transformation of the welfare state."
Abstract: The literature on the welfare state assumes, often implicitly but almost universally, that social insurance can or will be provided through the state. This assumption is based on economic models of insurance that show the propensity for market failure when information is limited and privately held. With the data revolution this is no longer a satisfactory approach, and this paper asks what happens when information rises and can be credibly shared with insures. Our model shows that Big Data alters the politics of social insurance by increasing polarization over the level and cost-sharing of public provision, and sometimes by creating majorities for a shift towards segmented and inegalitarian private markets (a shift that is conditioned by government partisanship). We offer a preliminary test of the model examining the relationship between information and life insurance market penetration and between information and polarization.

"Taxes and the Distribution of Income."
Abstract: My paper considers a variety of issues related to taxes. I'll focus on the section titled "Taxes and the Distribution of Income." I begin with taxation and redistribution. Taxes help to redistribute income. Their main contribution is indirect: taxes fund the transfers that redistribute income. For this reason, the quantity of revenues a country raises turns out to matter more for inequality reduction than the progressivity of its tax system. Does this hold up when we shift to data that include the top 1%? Probably yes, but we don't have comparable data for many countries. How, if at all, do taxes affect the pretax income distribution? Here I focus on the impact of top statutory tax rates on the pretax income share of the top 1%. Higher top tax rates appear to reduce top-end income inequality, though this effect is likely small.

"Buying, Expropriating, and Stealing Votes."
Abstract: This paper examines the ways in which candidates use social policies to condition the electoral choices of voters in contemporary elections in Eastern Europe.  It examines political strategies where candidates deploy employees of the state as their brokers and distinguish between the use of positive inducements (welfare favors) and negative inducements (welfare coercion). In the case of the latter strategies, brokers threaten to cut access to social policy benefits to voters who support the incorrect political candidate.  I report the results of five waves of surveys in three Eastern European countries that rely on novel survey techniques (list experiments) to document the incidence of these nonprogrammatic strategies.

"Enlightenment and solidarity: National union movements, distributive norms and the union effect on support for redistribution."
Abstract: Using data from the European Social Survey (2002-14), this paper explores the effect of union membership on support for redistribution. We hypothesize that the wage-bargaining practices of unions promote egalitarian distributive norms among low-wage and high-wage union members alike and that distributive norms in turn lead union members to support redistribution. Consistent with our expectations, the empirical analysis shows that the solidarity effect of union membership is strongest when unions encompass a very large share of the labor force or primarily organize low-wage workers. We also show that low-wage workers have become a significantly less important union constituency in many European countries over the time period covered by our analysis

"The Consumer Economy and Redistribution."
Abstract: This paper identifies, but does not resolve, contradictory findings on the role of consumption on redistribution.  Qualitative studies of the U.S. and Europe consistently find that savings and investment are strongest, and consumption is weakest, in precisely those countries where the welfare state is strongest.  On the other hand, this paper conducts a quantitative analysis of the relationship between the proportion of GDP devoted to consumption and public welfare state spending, and finds a robust positive association that remains even after controlling for other factors that affect the size of the welfare state.

"Preferences that Matter: Inequality, Redistribution, and votiing."
Abstract: While a significant literature in political economy has recently focused on the relationship between inequality and redistribution preferences, it is unclear that these preferences have any influence over political behavior. In this paper we argue that redistribution preferences are indeed a most significant determinant of voting. We will show that voting for the Democratic Party by the rich is highly dependent on state inequality levels. The rich in more unequal states are more supportive of redistribution than the rich in more equal states. We contend that it is precisely these redistribution preferences that make them more likely to vote for the Democratic Party. Our analysis goes beyond previous research by explicitly studying this preference mechanism in a potential-outcomes framework. We disentangle the direct and indirect effects of inequality to obtain estimates of inequality’s effect on voting through preferences.

"Origins of Wealth Equality."
Abstract: In advanced economies, the distribution of wealth became much more equal during the twen- tieth century. We investigate the origins of this process using newly available data on wealth inequality and wealth equalizing policies. We ask first whether government policy mattered, with the alternative being that wealth inequality depended only on underlying economic trends or exogenous shocks to capital. Difference in differences estimates, supplemented by country time trends, suggest that capital income taxation and inheritance taxation substan- tially reduced top one percent wealth shares. Compulsory schooling had a similar effect after an expected time lag. Consistent with economic theory, we also find that pretax returns on capital income and their variance had large effects on wealth inequality. We ask next what political conditions produced these policy choices, finding that expansion of the suf- frage alone is an insufficient explanation. We argue that the adoption of wealth equalizing policies depended on newly enfranchised voters reaching a consensus on progressive taxation and universal education and that this consensus emerged when religious conflict was limited and when countries participated in wars of mass mobilization.

"Unemployment and Turnout"
Abstract: A generation ago, Rosenstone (1982) showed that unemployed Americans were less likely to vote than employed ones. Those who lost their jobs shortly before the election were especially likely to abstain. Rosenstone attributed the unemployment effect to heightened opportunity costs that the unemployed faced for the time needed to vote, and the waning effect to an easing of these costs over time. By expanding the period under analysis from one election during a recession (1974) to 18 national elections (1974-2010), six of them during recessions, we show that the waning effect of unemployment on turnout is a feature of high-unemployment contexts. In low-unemployment contexts, people who lose their jobs even many weeks before an election remain less likely to vote than those holding jobs. To explain these patterns we have to broaden our focus beyond the opportunity costs of voting and take into account party conflict over the economy and the emotional fallout of job loss. When campaigns unfold in high-unemployment contexts, challengers politicize the jobs situation, inducing anger among the unemployed and hence increasing their willingness to participate. We offer additional evidence linking the emotional impact of unemployment to participation with surveys in the U.S. and Britain and from an original survey experiment of unemployed people in the U.S.