Income inequality and social preferences for redistribution and compensation differentials
By: William R. Kerr
Contributors: National Bureau of Economic Research
Series: NBER working paper series -- working paper 17701; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 17701.
Publisher: National Bureau of Economic Research
Published: 2011
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "In cross-sectional studies, countries with greater income inequality typically exhibit less support for government-led redistribution and greater acceptance of wage inequality (e.g., United States versus Western Europe).  If individual nations evolve along this pattern, a vicious cycle could form with reduced social concern amplifying primal increases in inequality due to forces like skill-biased technical change.  Exploring movements around these long-term levels, however, this study finds mixed evidence regarding the vicious cycle hypothesis.  On one hand, larger compensation differentials are accepted as inequality grows.  This growth in differentials is of a smaller magnitude than the actual increase in inequality, but it is nonetheless positive and substantial in size.  Weighing against this, growth in inequality is met with greater support for government-led redistribution to the poor.  These patterns suggest that short-run inequality shocks can be reinforced in the labor market but do not result in weaker political preferences for redistribution"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 2/21/2012.

Includes bibliographical references.

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