Declining Wages Increase Selfish Redistribution in an Environment with Fixed Income Inequality

Henrik Zaunbrecher; Nickolas Gagnon

doi:10.26481/umagsb.2020023

Declining Wages Increase Selfish Redistribution in an Environment with Fixed Income Inequality

Henrik Zaunbrecher, Nickolas Gagnon

Research output: Working paper / Preprint › Working paper

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Abstract

We use a highly-controlled laboratory experiment to study the causal impact of income decreases on redistribution decisions, in an environment where the income inequality that may be created with wage changes is kept fixed. First, we investigate the role of a decreasing wage compared to one’s past wage (intra-personal decrease). Second, we investigate the role of a wage that decreases relative to the wage of another person (inter-personal decrease). If intra-personal or inter-personal decreases create dissatisfaction for an individual, that person may support redistribution policies that compensate him or her for the situation or rectify it. Overall, we find evidence that individuals indeed behave more selfishly when they experience decreasing wages. While many studies examine the effect of income inequality on redistribution decisions, this is the first to isolate the effect of income changes.

Original language	English
Publisher	Maastricht University, Graduate School of Business and Economics
Number of pages	41
DOIs	https://doi.org/10.26481/umagsb.2020023
Publication status	Published - 27 Aug 2020

Publication series

Series	GSBE Research Memoranda
Number	023
ISSN	2666-8807

JEL classifications

c91 - Design of Experiments: Laboratory, Individual
d31 - Personal Income, Wealth, and Their Distributions
d63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

Keywords

income inequality
income change
social preferences
social comparison
income redistribution

Access to Document

10.26481/umagsb.2020023

RM20023Final published version, 654 KB

Cite this

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