Imperfect Information and the Meltzer-Richard Hypothesis

Christian Bredemeier

No 213, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Despite a strong theoretical prediction that income skewness and redistribution should be positively linked, empirical evidence on this issue is mixed. This paper argues that it is important to distinguish between sources of changes in income skewness. Two sources of such changes are discussed: rising polarization and upward mobility, which both increase income skewness. Under imperfect information, these developments affect redistribution in diff erent ways. While rising polarization increases redistribution, upward mobility can have the opposite eff ect. Reasonable degrees of informational imperfection are suffi cient to generate increasing income skewness and decreasing redistribution in the presence of upward mobility.

Keywords: voting; redistribution; imperfect information (search for similar items in EconPapers)
JEL-codes: D72 D83 H24 (search for similar items in EconPapers)
Date: 2010
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Journal Article: Imperfect information and the Meltzer-Richard hypothesis (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:213

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