The Limits of Equality: Insights from the Israeli Kibbutz

Ran Abramitzky

The Quarterly Journal of Economics, 2008, vol. 123, issue 3, 1111-1159

Abstract: What limits the capacity of society to redistribute? What determines the structure of compensation in organizations striving for income equality? This paper addresses these questions by investigating the economic and sociological forces underlying the persistence of the Israeli kibbutzim, communities based on the principle of income equality. To do this, I exploit newly assembled data on kibbutzim and a financial crisis in the late 1980s that affected them differentially. The main findings are that (1) productive individuals are the most likely to exit and a kibbutz's wealth serves as a lock-in device that increases the value of staying; (2) higher wealth reduces exit and supports a high degree of income equality; and (3) ideology facilitates income equality. Using a simple model, I show that these findings are consistent with a view of the kibbutz as providing optimal insurance when members have the option of leaving. More generally, these findings contribute to an understanding of how mobility limits redistribution, and to an understanding of the determinants of the sharing rule in other types of organizations, such as professional partnerships, cooperatives, and labor-managed firms.

Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (101)

Downloads: (external link)
http://hdl.handle.net/10.1162/qjec.2008.123.3.1111 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:qjecon:v:123:y:2008:i:3:p:1111-1159.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva

More articles in The Quarterly Journal of Economics from President and Fellows of Harvard College
Bibliographic data for series maintained by Oxford University Press ().