Religion, Income Inequality, and the Size of the Government

Ceyhun Elgin, Turkmen Goksel (), Mehmet Yigit Gurdal and Cuneyt Orman ()

MPRA Paper from University Library of Munich, Germany

Abstract: Recent empirical research has demonstrated that countries with higher levels of religiosity are characterized by greater income inequality. We argue that this is due to the lower level of government services demanded in more religious countries. Religion requires that individuals make financial sacrifices and this leads the religious to prefer making their contributions voluntarily rather than through mandatory means. To the extent that citizen preferences are reflected in policy outcomes, religiosity results in lower taxes, which in turn implies lower levels of spending on both public goods and redistribution. Since measures of income typically do not fully take into account the part of income coming from donations received, this increases measured income inequality. We formalize these ideas in a general equilibrium political economy model and also show that the implications of our model are supported by cross-country data.

Keywords: religion; voluntary donations; taxation; redistribution; income inequality (search for similar items in EconPapers)
JEL-codes: D63 Z12 H20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-pol
Date: 2010-09-17
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Related works:
Journal Article: Religion, income inequality, and the size of the government (2013)
Working Paper: Religion, Income Inequality, and the Size of the Government (2012)
Working Paper: Religion, Income Inequality, and the Size of the Government (2010)
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