ارزش کار، توزیع مجدد احساسات درون زا
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|21676||2010||16 صفحه PDF||سفارش دهید||محاسبه نشده|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Public Economics, Volume 94, Issues 9–10, October 2010, Pages 612–627
We examine the interactions between individual behavior, sentiments and the social contract in a model of rational voting over redistribution. Agents have moral “work values”. Individuals' self-esteem and social consideration of others are endogenously determined comparing behaviors to moral standards. Attitudes toward redistribution depend on self-interest and social preferences. We characterize the politico-economic equilibria in which sentiments, labor supply and redistribution are determined simultaneously. The equilibria feature different degrees of “social cohesion” and redistribution depending on pre-tax income inequality. In clustered equilibria the poor are held partly responsible for their low income since they work less than the moral standard and hence redistribution is low. The paper proposes a novel explanation for the emergence of different sentiments and social contracts across countries. The predictions appear broadly in line with well-documented differences between the United States and Europe.
In this paper we explore the interplay between work ethics, sentiments and social policy. We present a model where agents have standards of behavior relative to which they judge the actions of others, increasing their regard for those who exceed the standard and decreasing it for those who fall short. Similarly, according to social psychologists, agents' self-esteem is affected by their own deviations from moral standards in much the same way.1 As agents' sentiments change, so, too, will their behavior. Moreover, this is likely to affect their view of the benefits of social programs and the worthiness of participants. The converse is true as well: social policies or institutions — the social contract — generally affect behavior and this, in turn, affects sentiments, as described above. Therefore, sentiments, behavior and social institutions must be determined jointly. To study this interaction, we extend the model by Meltzer and Richard (1981) of rational voting over redistributive taxes to include endogenous sentiments. In their model, agents supply labor in return for competitive wages, and earnings are subject to a purely redistributive proportional tax. The tax structure is determined by majority rule and reflects the preferences of the median voter. Agents are assumed to be purely egoistic and the median income is below the mean. Under these circumstances, if labor supply were inelastic, the resulting tax policy would be fully confiscatory. However, since labor supply is endogenous and agents foresee the disincentive effects of taxation, they will temper their demands for redistribution and adopt a more moderate tax structure. An important implication of the model is that higher income inequality necessarily leads to greater equilibrium redistribution. In contrast, we assume that agents are altruistic and that sentiments are determined endogenously. We assume agents evaluate their own performance and that of others relative to the work standard, increasing their regard for those who exceed the standard and decreasing it for those who fall short.2 As a benchmark we take the mean labor supply to be the moral standard. Formally, we consider a continuum of agents who differ in their productivities. For simplicity, we assume there are only two types of individuals, skilled and unskilled, with the latter comprising more than half of the population. Agents have private preferences over consumption and leisure and social preferences that take into consideration the welfare of others. In addition, private preferences depend on self-esteem which is subject to the moral calculus mentioned above, namely, the more one works relative to the social standard of behavior, the greater the perception of oneself as industrious and the greater the sense in which leisure is “well deserved.” The social component of the utility function consists of a weighted average of the (private) well-being of others, where the weights depend on their industriousness. The endogenous variables in our model — labor supply, sentiments and taxes — are determined as follows. First, given their sentiments and the tax schedule, agents make labor supply decisions. Since there is a continuum of individuals, the labor supply decision has no impact on others and is therefore made on the basis of private preferences. Next, having determined their labor supplies, we assume agents evaluate such behavior relative to the moral standard and modify their sentiments accordingly. Finally, given their sentiments, individuals vote over redistribution, anticipating the labor supply effects of taxation. Since the tax policy has an economy-wide effect, such voting decisions are made on the basis of social preferences. The unskilled agents being in the majority, the median tax policy will be that preferred by an unskilled worker. A politico-economic equilibrium consists of a vector of labor supplies, sentiments and tax policy such that each is optimal given the other components and all such variables are compatible. There are two types of politico-economic equilibria in our model. In a cohesive equilibrium all individuals conform to the moral standards. In these equilibria all agents receive equal social consideration. The chosen tax rate might be high relative to the second type of equilibrium. In contrast, in a clustered equilibrium, society is divided into two groups or clusters. One consists of the most productive individuals who work above the mean, while the other consists of the least productive individuals who work below the mean. 3 In a clustered equilibrium the chosen tax rate might be lower than in a cohesive society. Conditional on the strength of work values, whether an economy becomes cohesive or clustered crucially depends on the degree of inequality of pre-tax income or skill level. If inequality is below a critical level, then cohesion results, whereas higher inequality leads to social clustering. The theory provides several implications concerning the relationship between labor supply, inequality, redistribution and individual attitudes. First, the distinguishing feature of cohesive equilibria is that all agents adhere to the moral norm. Hence, for low levels of inequality (associated with cohesive equilibria) we observe little or no dispersion in labor supply, while for high levels of inequality there is a widening gap between the labor hours of skilled and unskilled workers. Second, the model offers a plausible explanation of how inequality and redistribution might be inversely related in spite of the fact that the poor constitute a majority. In a cohesive equilibrium, all agents contribute the same level of effort and hence differences in income are solely attributable to the exogenous inequality in productivities. As such, those with low skill are seen to be poor through no fault of their own. In this case higher income inequality leads to support for greater redistribution. Such a positive relationship holds for moderately higher levels of inequality as well. But when productivities are sufficiently different that clustering occurs, this may lead to large differences in labor supply. In this case the poor are seen to be at least partly responsible for their low income and support for redistribution declines. It follows that we might observe one (cohesive) society with low pre-tax earnings inequality choosing to redistribute more than another (clustered) society with greater inequality. Moreover, such divergent attitudes toward the poor are endogenously determined. The model proposed here affords a novel explanation for the emergence of different sentiments and social contracts. In particular, it yields predictions which are in line with the following four well-documented differences between the United States and Europe.4 First, in the US there is considerably greater inequality (in both pre-tax income and the distribution of skills) than in continental Europe.5 Second, despite having less inequality, European countries engage in significantly more fiscal redistribution.6 Third, the distribution of work hours is substantially more disperse in the US.7 Finally, compared to Europeans, a much larger proportion of Americans tend to view poverty as resulting from laziness.8 These stylized facts, which either conflict with or lie beyond the scope of existing theories, are reconciled and rationalized by the predictions of our model. The paper is organized as follows. Section 2 discusses the related literature. Section 3 describes the basic set up, characterizes optimal labor supply and discusses the determination of sentiments. In Section 4 we examine socioeconomic equilibria, where the tax structure is taken as given. Section 5 studies preferences over redistribution and characterizes politico-economic equilibria in which taxes, sentiments and labor supply are determined jointly. In Section 6 we specify functional forms which allow us to analytically characterize the different equilibria and to study explicitly the relationship between inequality, social cohesion and redistribution. All analytical derivations and proofs are relegated to Appendix A.