Does reducing inequality increase cooperation?
Abhijit Ramalingam () and
Brock Stoddard ()
No GRU_2021_022, GRU Working Paper Series from City University of Hong Kong, Department of Economics and Finance, Global Research Unit
Inequality reduces the ability of communities to work together. The theory of reciprocity suggests reducing inequality allows groups to increase cooperation. We experimentally test if, after experiencing inequality, unconditional income transfers to the poor increase contributions to public goods. Both pure redistribution to eliminate inequality and additional resources directed to the poor without reducing resources of the rich fail to raise cooperation beyond levels observed in groups that were always equal. The rich do not respond to additional resources available to the group, and continue keeping most of their resources for private consumption. After receiving additional resources, the poor mimic the contribution behaviour of the rich. This shift of the majority of additional resources towards private consumption renders transfers ineffective in raising cooperation.
Keywords: reciprocity; inequality reduction; income transfers; cooperation; public goods; experiment (search for similar items in EconPapers)
JEL-codes: C91 C92 D31 D63 H41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm and nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:cth:wpaper:gru_2021_022
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