Title: Income inequality and social preferences for redistribution and compensation differentials
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.