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Work Values, Endogenous Sentiments and Redistribution

Matteo Cervellati (), Joan Esteban () and Laurence Kranich ()

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: We examine the interactions between individual behavior, sentiments and the social contract in a model of rational voting over redistribution. Agents have moral "work values". Individuals' self-esteem and social consideration of others are endogenously determined comparing behaviors to moral standards. Attitudes toward redistribution depend on self-interest and social preferences. We characterize the politico-economic equilibria in which sentiments, labor supply and redistribution are determined simultaneously. The equilibria feature different degrees of "social cohesion" and redistribution depending on pre-tax income inequality. In clustered equilibria the poor are held partly responsible for their low income since they work less than the moral standard and hence redistribution is low. The paper proposes a novel explanation for the emergence of different sentiments and social contracts across countries. The predictions appear broadly in line with well-documented differences between the United States and Europe.

Keywords: Social Contract; Endogenous Sentiments; Voting over Taxes; Moral Work Values; Redistribution; Income Inequality; Politico-Economic Equilibria. (search for similar items in EconPapers)
JEL-codes: D64 D72 Z13 H3 J2 (search for similar items in EconPapers)
Pages: 43
Date: 2010-03-25
New Economics Papers: this item is included in nep-evo and nep-pol
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Working Paper: Work Values, Endogenous Sentiments and Redistribution (2010) Downloads
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