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Preferences for redistribution and exposure to tax-benefit schemes in Europe

Francesco Andreoli () and Javier Olivera ()

European Journal of Political Economy, 2020, vol. 63, issue C

Abstract: This paper provides evidence that attitudes towards redistribution are associated with the extent of generosity of the redistributive context experienced by the individual, as measured by the likelihood of receiving positive benefit transfers net of fiscal contribution. We estimate reduced form tax-benefit equations with the EU Statistics on Income and Living Conditions (EU-SILC), and match the implied parameters to the respondents of the European Social Survey (ESS) on the basis of their characteristics. The period of analysis is 2008–2016. For identification, we exploit exogenous cross-country and time variation in tax rules and market income to disentangle implications of exposure to tax-benefit rules on preferences for redistribution from the effects of changes in income inequality. We find that exposure to positive net benefits increases support for redistribution by 1.4%–3% on baseline models, the effect being robust across a variety of specifications.

Keywords: Income inequality; Preferences for redistribution; ESS; EU-SILC; Tax-benefit system (search for similar items in EconPapers)
JEL-codes: D31 D63 D72 H20 (search for similar items in EconPapers)
Date: 2020
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Working Paper: Preferences for redistribution and exposure to tax-benefit schemes in Europe (2019) Downloads
Working Paper: Preferences for redistribution and exposure to tax-benefit schemes in Europe (2019) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:63:y:2020:i:c:s0176268020300288

DOI: 10.1016/j.ejpoleco.2020.101880

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